Private Equity
Seemingly overnight, early-stage investor Josh Kopelman has become something of a business celebrity. The attention stems partly from the fact that his venture firm, First Round Capital, continues to actively back young companies despite the recession. Partly, it owes to the several successful exits First Round has already enjoyed since opening just five years ago. Perhaps given Kopelman’s background as an entrepreneur -- he cofounded Infonautics Corp. (IPO in 1996), Half.com (bought by eBay for $312 million in stock in 2000) and TurnTide (sold for $28 million to Symantec six months after its founding) -- it’s no surprise that entrepreneurs uniformly speak highly of him, too. I caught up with Kopelman yesterday, as he commuted from New York to Philadelphia, near First Round’s West Conshohocken headquarters. Among other things, we talked about how the market looks, six months into 2009; why he helped buy back StumbleUpon from eBay; and whether or not it makes sense for entrepreneurs with no VC experience -- many of whom are now starting microcap venture vehicles like First Round’s earliest funds -- to break into the business.
7 min read · 04 June 2009
2 min read · 22 May 2009
I'd guess a few VCs and buyout pros wiped their brows after reading the latest report to conclude that index funds are the best place for investors to park their money. (PE funds escaped notice, while hedge funds and mutual funds were called out for their aggressive management fees -- expenses that often render outperformance meaningless.) More here on the new study, whose author, Mark Kritzman, president and chief executive of Windham Capital Management of Boston, says in its pages that “it is very hard, if not impossible to justify active management for most individual, taxable investors, if their goal is to grow wealth.”
1 min read · 24 February 2009
Back in 2006, a number of ex-Googlers became full-time investors, including angels Aydin Senkut, Georges Harik and Paul Buchheit (founder of FriendFeed). It would be overstating things to say that the tide has now turned, but at least one former VC, Karim Faris, has joined Google to focus on investments and acquisitions. Faris spent the last year and a half working independently to help startups build their teams and raise financing, but for four years before that was a principal at Atlas Ventures in Boston, where he sat on the boards of Atlas-backed Lilliputian Systems, a Wilmington, Mass., a portable fuel cell technology startup, and CLK Design Automation in Littleton, Mass., which makes timing and power analysis tools used in microprocessor design (and that continues to list Faris as a board member, and
1 min read · 09 December 2008
First Round Capital, a four-year old venture firm based in suburban Philadelphia, is so far among the most active Internet investors of 2008. It has backed 17 new startups, and is tied only with Draper Fisher Jurvetson, a much larger fund. As 2008 winds to a close, and the National Bureau of Economic Research officially declares a recession, I thought it made sense to check in Josh Kopelman, who founded First Round and whose past accomplishments include cofounding the companies Infonautics Corp., which went public in 1996, and Half.com, which sold to eBay in 2000. I wondered where he thought Internet investing might head from here, and how he plans to approach 2009. The economy is in a tailspin. Where does it make sense to invest online right now? The deals we think are the most attractive now are capital efficient and somewhat counter cyclical. Mint Software is a perfect example of a counter-recessionary business, one to which people are turning as they focus on their portfolios and saving money.
5 min read · 02 December 2008
4 min read · 13 November 2008
4 min read · 12 November 2008
In January of last year, for the San Jose Mercury News, I wrote about 27-year-old Sherwood Partners in Palo Alto, long known to industry insiders as “the undertaker" because its primary role is to efficiently shutter companies. Sherwood made a killing in the aftermath of the Internet bubble, closing down roughly 180 startups. In the years that followed, however, as the tech economy rebounded and startups became more efficient, Sherwood's business slowed considerably. It closed two satellite offices that it had opened and cut down its staff of 60 MBAs and CPAs to less than 30. In fact, as I was writing my piece, it was fair to compare Sherwood to some of the former high-fliers it has wound down -- and I did. What a difference an almost unprecedented economic meltdown makes. When I caught up with Sherwood’s gregarious cofounder Marty Pichinson on Friday afternoon, he was just wrapping up an hour-long conference call, juggling two new calls, and eager to escape the office after a very long week. Before he took off, Pichinson, who has an inimitable flair for drama, told me why startups should keep their PR people, how to negotiate with a landlord, and what most startup employees can expect in the way of a severance package.
8 min read · 25 October 2008
Earlier today, I spoke with Jeff Lanctot, chief strategy officer for Razorfish, one of the world’s biggest interactive agencies, about advertisers’ mentality in the face of a prolonged downturn. Yahoo just laid off 10 percent of its workforce, and the bad news keeps coming. How are your clients reacting? Most are doing contingency planning. They’re very well aware of the economic turmoil we’re facing. They’re trying to figure out what the impact will be on their businesses specifically. As part of process, they’re doing scenario planning: if we cut here, what does it mean? If we cut there, how will that affect us? There’s a flight to
6 min read · 22 October 2008
Last week, in the middle of a stomach-churning afternoon on Wall Street, I rang Mark Jensen, a partner and the National Director for the Venture Capital Services Group at Deloitte & Touche to see how his firm is faring. Jensen shared a few thoughts with me, including why despite the gloom that has enveloped Silicon Valley, he is filled with a kind of joyful anticipation. You’ve been in this industry since 1994. Where do you think we are on the spectrum of bad to worst? I think we’re at stage one. We’ve seen the meltdown, certainly in the financial services industry. Now the news we’re seeing today is that, okay, we really are in a recession. But this feels differently than anything I’ve seen before. I’m not suggesting we’re heading into the second Great Depression. But it’s comprehensive. This downturn involves the financial system, homeowners, and consumers. And when you think about the tech industry, you realize that a lot of products are sold into the consumer products market, whereas in previous downturns, most of the tech was being sold into other companies. It was focused on the information technology used by large enterprises. So you think tech companies are about to be walloped. Well, yes, as you start to look ahead, it looks like tech companies are going to be hit, and what you’re seeing is a complete tightening of the belts trying to get ready for it. You could say that we’re causing our own recession because no one is spending anything
5 min read · 21 October 2008
