Blog
Welcoming Scale Venture Partners to BrightRoll
February 4, 2010
Today BrightRoll announced it’s $10 million Series C round of financing led by Scale Venture Partners. Rob Theis is leading the deal for Scale, and will be joining me, Vince Vanelli of KPG and David Welsh of Adams Street on the Board.
We’re incredibly proud of Tod, Dru, Charlie, Lewis and the team at BrightRoll who have built this company from a raw idea into the leading global online video ad platform. BrightRoll recently surpassed Hulu in terms of viewership, and Tod has built this company with a fraction of the capital used by his competitors.
I first me Tod through Plaxo in 2003, where he was Director of Revenue for Plaxo and I was on the board (through an investment I made at a prior firm). We worked closely together on several initiatives over a couple year period, and Tod always demonstrated his tenacity, smarts and raw talent. I was also lucky enough to get to know Dru really well in the early Plaxo days too, largely because I was always a “problem user” of Plaxo products because I had so many computers. Dru spent countless hours debugging my setups, and we became friends.
When they decided to leave Plaxo and start BrightRoll in mid-2006, I counted myself lucky to a) get the call and b) have True’s first fund raised so that we could invest in his idea from day one. I remember calling him to tell him we’d take all of the available room in his seed round, and if anyone dropped out, we’d take that too. At True, we place an unbelievable emphasis on Founders, so my prior experience with them meant a lot.
The BrightRoll journey has been as challenging as any other startup, but at every turn Tod and Dru have displayed an exceptionally clear vision for the industry, and they’ve built the company with quality and care. The team is also serious about building a real business. About one month into our seed investment, Tod called me to report on the first month’s revenue. I’m normally not one to expect revenues so soon in our seed deals, so I congratulated him and laughed a bit about my surprise. He commented that he found my surprise surprising: he just didn’t understand how so many web 2.0 startups of the time were unable to focus on revenues.
BrightRoll has been strong since the beginning, but in early 2009 we at True decided to aggressively invest behind the company. We thought the downturn presented a particularly ripe opportunity for expansion and growth, and we at True (as well as KPG and Adams Street) stepped up to fund this expansion (in a very Founder-friendly fashion). This was part of our “make the strong stronger” strategy in 2009. This was scary to some but seemed smart to us, largely due to the tremendous talent that Tod had built on his team. It didn’t hurt that he’s pursuing a great market, and did so with tremendous discipline (Brightroll’s been profitable for awhile now).
2009 was a great year for the company, and with our new financing we look forward to continued growth.
We were lucky to have many options for this recent financing, but the Scale team early on demonstrated an understanding of the company and market opportunity that was unique. At True we have a lot of respect for Rory, Kate, Sharon and Rob, and we really like what they’re building. We’re very pleased to have them on board with us.
Congrats to Tod, Dru and the entire team on an important next step towards building an exceptional company.
Jive Software Acquires FiltrBox
January 7, 2010
Today Jive Software announced the acquisition of Filtrbox. True seed funded Ari Newman and Tom Chikoore in the winter of 2008, and we have worked closely with Ari and his team as Filtrbox developed a market leading product in the real-time social media monitoring marketplace.
We’re extraordinarily proud of Ari, Tom, Patrick and the rest of the team at Filtrbox for this fantastic outcome. Filtrbox will become Jive’s Boulder, Colorado team, and the Filtrbox products will enable Jive to “drill deeper to drive business value from the real-time web with unique applications to bridge related internal activities and market-facing activities.”
This is a terrific outcome for everyone involved, and we’re particularly proud of the way Ari and his team navigated the waters of the social media landscape over the past two years. The team built a robust and powerful product that rapidly distinguished itself in a competitive and rapidly changing marketplace.
Ari and Tom are a shining examples of the types of entrepreneur we strive to work with at True. Starting on day one, they diligently and rapidly built a solid product, launched it early and often, and attracted customers to the platform. Filtrbox exemplified agility, as the team kept their eyes and ears close to their customers and tuned and iterated their sales process and business model to stay ahead of a rapidly growing market.
Ari and his team worked incredibly hard to build Filtrbox, and we really love the way that they always found time to contribute meaningfully to the True Founder family.
We are immensely grateful for the team’s efforts and dedication over the past two years, and we look forward to supporting Ari and Filtrbox on the next leg of their journey.
Join Us For A Glass or Three To Celebrate True’s Best VC Crunchies Nomination
January 6, 2010
As you may know, True has been nominated for a Crunchie Award as the Best Venture Capital firm – you can vote for us here if you like how we operate:
The award ceremonies are on Friday. Prior to the festivities, the True gang will be celebrating at the Absinthe Brasserie & Bar – if you’re in the neighborhood, we’d love for you to join us for a drink – just stop by the bar, we’ll be there @ 5:30! The address is 398 Hayes Street (at Gough).
Looking Back on 2009
January 5, 2010
It was the worst of times. It was the best of times. 2009 was a year to remember.
We’ve been reflecting a lot during the past few days on 2009, and the past year was by far our busiest and most impactful year in our firm’s four-year life. Like the rest of the industry, we entered early 2009 with questions and doubt. It was a scary, unnerving time with venture firms publicly announcing no new investments, and everywhere you looked were reminders or admonishments to let “good times rest in peace.”
Both sides of the venture capital equation, investors (limited partners) and entrepreneurs, were under tremendous financial stress as the world around us all had changed. For True, the timing of the meltdown created opportunity and significant risk, because we had just successfully closed our second fund in September 2008, literally 48 hours before Lehman Brothers failed. Although we were incredibly lucky because we were in a position to invest, expectations and tensions were high given that the financial world had changed so dramatically.
As a young start-up ourselves, we knew that the path of least resistance would be to follow the crowd and play it safe while the downturn worked its way through the economy, but what would be the opportunity cost for that strategy? In order to figure this out, we went straight to the very heart our model: our Founders. After spending considerable time with each of our Founders and their teams, it became abundantly clear that despite the global economic turmoil, our sector (very early stage technology) was undergoing a fundamental resurgence. The largest trends in technology were creating substantial new markets, in which start-ups had significant opportunity, and these trends were minimally impacted by the global credit/liquidity crisis.
Core innovations in internet-based technologies over the previous ten years were beginning to manifest themselves into large segments. These segments included the social and real-time web, cloud computing infrastructure, mobile products and services, enterprise 2.0 and even new computing devices and hardware. Though a prolonged recession and curtailed consumer spending would eventually impact these segments, in reality these markets were extremely nascent, and, in our view, it was time to build for the future.
We thought 2009 was particularly timely for True because of our very early stage strategy. It’s basic, but it’s true: early stage venture capital has a 5-10 year investment period, which means today’s investments are not directly correlated with current market conditions. The idea of an early stage venture firm cutting its investment in 2009 made no sense to us. For example, it just didn’t stand to reason that because the world was reeling from a (severe) housing and credit crunch, enterprise IT wouldn’t undergo massive re-architecting over the next six years.
As we concluded our research, we formed a thesis: our strategy of investing behind truly great entrepreneurs in early stage technology businesses who are highly capital efficient was well timed for the 2009 market.
We took a deep breath and decided to double down. In January 2009, we doubled our forecast for new deals, and we encouraged our portfolio to become more aggressive in the downturn.
For new deals, True closed 21 new investments in 2009, which compares to 14 in 2008 and 10 in 2007. We can be judged by the company that we keep, and we are fortunate to have invested with an incredible group of entrepreneurs such as Tim Young at SocialCast, Peter Rojas & Ryan Block at GDGT, Howard Lindzon & Soren Macbeth at StockTwits and Jack Abraham at Milo.
(Click here to see a full list of our portfolio.)
Simply making more new investments, however, was not enough. We also had a large portfolio of existing companies that could use our dollars to make the downturn their advantage. We set aside approximately $20 million of our reserve capital to invest in the existing portfolio with an emphasis on making the strong stronger. We believed 2009 would be a good time for our break-out companies to further their lead. Many of these companies took advantage of our reserve capital to acquire competitors (who were distressed), grow market share, deepen product teams, and hire sales folks. We structured our investments as friendly bridges to future rounds, as our intent was not to take advantage of the timing to buy more equity but rather enable our strong companies to get stronger.
We’ll know the real results from our actions in 2009 over the next 5+ years, but the early results of these moves look incredibly promising.
To cap off a big year for the firm, we were recently nominated for the Crunchies for Best VC Firm of 2009, and two of our portfolio companies, Milo and StockTwits were nominated for Best Startup or Product and Best Social App, respectively. We are honored to have been nominated by the industry, and we think this is really a reflection of the great entrepreneurs in the True family. Our mission at True is to help make an entrepreneur’s dream come true, and we founded our firm on the core belief that all power, creativity, and energy in the venture capital ecosystem starts (and ends) with the entrepreneur. We have a total of 51 investments in the portfolio, which equates to 92 Founders and 483 employees. This is an incredible group of people, and each of them has endowed us with their faith and confidence. Our Founders are our biggest source of inspiration for our firm, and their efforts and energies are most responsible for our success.
Thank you to everyone who helped our efforts in 2009. It was a very busy year, and as entrepreneurs ourselves, building True has been and continues to be incredibly gratifying.
Now is not the time to rest on our laurels. Venture capital needs more innovation, and we have an ambitious agenda for the years ahead.
We look forward to working hard for you in 2010 and beyond.
Happy company building!
Its All About the Data . . .
December 23, 2009
We hear the phrase all the time and deservedly so given the explosion in digital data. Google, Twitter, and Facebook have helped consumers gain a certain level of context around the data by enabling us to search the past, find out what’s happening now, and connect with our friends. We are also continuing to see a whole slew of new services that are innovating and providing more context to the end user.
One of the bigger questions that remains, however, is where is the equivalent on the IT side? The traditional enterprise search market has matured, is consolidating, and primarily focused on structured data. We believe there is a huge opportunity with the “dark matter” in the IT world, which exists in raw log files generated from web, application, and database servers. It’s a massive amount of data – in aggregate far more than what exists on the web – that still needs to be indexed, searched, and better understood. It is data that actually pre-dates the Internet and is as old as any computer system but without any affordable search solution until now . . .
We are extremely excited to announce our recent investment in Loggly, a SaaS solution for storing, reporting, and alerting around log data. Loggly will provide developers and admins a way to easily and affordably search log data. The true value will be in being able to correlate data across your back-end in near real time for application debugging, operations monitoring, security auditing, analytics, and a whole bunch of applications we haven’t even thought of. Think Twitter for your IT machines with the appropriate context added.
Loggly founders Kord, Raffy, and Jon bring a wealth of experience around log data, search, and building great product. We are excited to partner with them and look forward to learning more about their discoveries!
Also, see Loggly’s blog on the funding announcement.
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StockTwits Closes a $3M Round
December 2, 2009
Congrats to Soren Macbeth, Howard Lindzon and the StockTwits team on their well deserved new round of capital.
Mike Arrington at Techcrunch broke the story this morning that StockTwits has added $3 Million in capital from our good friends at Foundry Group with continued strong participation from True Ventures and seasoned Wall Street executive and investor Roger Ehrenberg .
Since launching a year ago, StockTwits has been moving very quickly to build a real time financial media company amid a landscape of transformation within the industry. With tens of thousands of users, StockTwits’ success is a testament to the power of the real-time web, where users customize their experience rather than simply accept destinations as-is. We are extremely happy to see their impressive traction and fast growth recognized.
One of the things we prioritize at True is partnering with entrepreneurs and investor groups with whom we’ve worked with in the past. Thus, we could not be more thrilled to add Foundry Group to the mix. We’ve worked closely with Seth Levine, Ryan McIntyre and Brad Feld for a very long time and we love the added perspective and energy they bring to the table.
You can read Howard’s and Seth’s thoughts on the investment here and here. Congrats to all.
Venture is Back, Baby
December 2, 2009
Over the past few weeks we’ve seen extremely high activity in new venture investments. Starting in September, we witnessed the return of multiple term sheet deals, short fuse situations, and a renewed urgency to most fund-raisings. I heard last week of a hot late stage deal attracting ten (yes 10) term sheets. It’s a really great company, but just one quarter ago that number would have been much lower. FastCompany’s Q3
The same VCs who hunkered down in January were back in the game in September, and they were back in force. We call the rise in new investment activity, “back to school investing”, and it represents a significant return to health after the prolonged hiatus that started in Q4 2008 with the infamous “RIP Good times” slide deck.
Venture is back. And it’s back because of one word: exits.
In Barron’s this weekend, Michael Santoli quoted a March 2007 Speech by Fed Reserve governor Kevin Warsh in which he said “Liquidity is confidence.” Exits mean liquidity, and liquidity brings confidence to GPs (and LPs), which spurs investment.
Just as analysts and pundits were decrying the “end of the venture experiment,” 2009 was quietly becoming an extraordinary year for venture exits, both in IPO and M&A form. Early 2009 venture-backed IPOs of OpenTable, SolarWinds, and more recently Ancestry.com (ACOM) and Fortinet (FTNT) have held up in the aftermarket, and more significantly these deals have demonstrated the public market’s desire for growth and comfort with small(er) company risk. There are rumored to be between 50-100 venture-backed companies that plan to file in Q1 2010. Speculation for 2010 IPOs also includes some game-changing companies, most notably Facebook, LinkedIn, and Zynga.
I was recently in group of VCs when someone asked who at the table had a privately held company in their portfolio with over $100mm in annual revenues? All of us raised our hands. I later asked this question of another group of GPs and got a similar show of hands. Even in our young True portfolio, where the median company age is only 2.5 years, the portfolio turned in a strong Q3, generating over $50 million in revenues. Across the valley, there is huge pent
Another reason for optimism is the recent increase in venture-backed M&A activity. We believe this will accelerate dramatically in the coming months because large cap tech currencies are up, layoffs have made these same companies lean and mean, but it’s also made them hungry.
Simply put, November 2009 looks a lot better than November 2008 if you’re a public tech company. Have a look at the 1-year charts for ORCL, MSFT, ADBE, YHOO, GOOG, AAPL to see the market cap’s steady march up to the right. But ‘08 and ‘09 were also times of RIFs and cost cutting. Think back to the headlines from last year of Google
These layoffs have two implications for private company M&A: the first is that by now, most large tech companies have reduced operating expenses dramatically and conserved or generated cash. 2009 was a year of focus, which meant curtailing ambitious new initiatives and reducing R&D spending. These efforts are good to get things cleaned up, but they present a big problem for the future, because big tech needs innovation to grow, and innovation happens fast these days. Many of the most exciting developments in tech are coming from young innovators who are leveraging newer architectures such as web 2.0 and real-time web. Marry those technologies to new distribution channels like Google & Facebook and lower friction sales models like on-demand. New technology, new business models, innovation.
M&A will involve younger companies in the next 12 months, because big tech needs the new stuff, not the old. Electronic Arts buying Playfish for over $400 million, Google’s $750 million purchase of Admob and Intuit buying Mint for $170 million are three recent examples. This should be another good thing for VCs.
Much like the health of the IPO window, the coming M&A Tsunami creates liquidity to the venture business, which will restore confidence in the logic behind the venture capital model. Though admittedly venture takes time, GPs at the “ground level” are seeing this now and acting rationally to deploy capital into this period.
2010 is shaping up to be an extraordinary time for venture capital and by extension, Silicon Valley.
Happy Thanksgiving from True
November 26, 2009
As we reflect on the phenomenal and memorable 2009, we’re thankful for so many things: health, family, friends, opportunity, human kindness, and the relative peace of the past year.
One other thing that we are especially thankful for is the sheer creative power of the entrepreneurial mind that we are so fortunate to witness everyday in our business. This energy inspires us at True each day to work harder to fulfill our commitment to each team in which we invest.
Thank you to our entrepreneurs, their teams and most of all of the families in our portfolio for their tireless efforts to move our world faster into the future.
Best wishes for a healthy and peaceful Thanksgiving from all of us at True.
Next
November 4, 2009
It has been almost five years now since Martin Remy, Steve Neiker, Toni Schneider, and I started working on Sphere. For me, it is around 10% of a life. It is also the time when I find myself thinking a lot about a particular question: What do I want to do next?
In 2005, I had the good fortune of being on the founding team of Sphere and joining True Ventures simultaneously. I always thought that I would eventually focus all of my attention on one or the other, but both were too much fun and I guess I’m selfish in that way. As time passed, I went deeper into each role, and I never got around to choosing one or the other. It worked out nicely. True is on its second fund, and Sphere had a successful sale to AOL in 2008. Most importantly, Sphere’s business and team are both thriving within AOL. While I am proud of my contributions to both, the heroes in this equation are Martin, Steve, Toni, Shea Di Donna, Braughm Ricke, Om Malik, Puneet Agarwal, John Burke, Phil Black, Jon Callaghan, Marty Moe, Bill Wilson, and AOL – they trusted and empowered me to pursue both. I am extremely grateful.
As I’ve thought through the question of what is next, I’ve realized that I love the complementary perspectives acquired from building a company as an entrepreneur and investor. They are symbiotic roles, and it is really hard to say which has influenced me more. While my role at True as a Venture Partner will continue to deepen (because there is nothing more rewarding than working with people you admire and trust), I also find myself with a burning need to start another company. I have discovered my formula and doing both makes me happiest.
As for my next company, I’m not sure what the answer to that question is, but I’ve decided that I need to move on from Sphere (now Surphace) to figure it out. This may feel like old news as I’ve been working to make myself obsolete as Josh Guttman transitioned into the CEO role. My decision is easy as I know that Surphace is in excellent hands. I would not feel comfortable leaving if I didn’t believe that Josh was the right leader for the business today. He is a natural leader and has a strategy for the future that I believe is going to accelerate growth for Surphace and AOL. I couldn’t be more pleased for Josh and excited for the Surphace team.
As for my thoughts about Surphace and AOL’s future, I’m more optimistic than ever. We joined AOL at an opportune time. AOL is doing what great, sustainable businesses do every so often – they’re reinventing themselves. As the business model of the oldest and one of the biggest Internet businesses evolves, Sphere/Surphace has become an important piece of their strategy to reach across and engage the web. In the past year, we have had an insiders view into how AOL’s new leadership team has moved aggressively to engage their audience (new vertical focused web-sites; a focus on engagement and not page-views for page-views sake; hiring leading journalistic talent when others downsized; acquisitions in the local content space; shorter development cycles with an emphasis on release, iterate and release). There is nothing like winning, and the AOL publishing business is winning. As a result, I’m pleased to also announce that I’ve agreed to serve as a Special Advisor to AOL Ventures as they reinvent themselves. I am thrilled at this opportunity to evolve my relationship.
I want to give a huge thanks to the people who’ve made the last few years what they were: my family tops the list, an entrepreneur is only as good as their support system and this is my secret sauce. My co-founders, Martin and Steve, who trusted me to play a role in helping them get the tech they invented the exposure it deserved. Toni and Phil who taught me about generosity at a moment when I was able to learn. Matt Mullenweg who opened up my thinking of how a start-up operates. Marty and Bill who have been consistently supportive since Day One – I can’t underscore enough how much I appreciate the manner in which they’ve empowered Sphere to thrive in an appropriately independent environment. They have treated me (and the Sphere team) with enormous respect for which I am both thankful and flattered. The original Sphere team, the current Surphace team, who have embraced AOL. Our investors and advisors who supported and helped shape our vision. The True team and entrepreneurs who have taught me about sacrifice, vision, execution, and the value of pursuing your dreams — and, of course, Lewis Dvorkin, Kevin Lockland, and Bill who paid us the nicest compliment of all in offering to acquire our company and then doing so.
It has been a thrilling, at times difficult, always rewarding, and lucky ride I’ve been on. Thanks to all.
Spectrum Bridge Creates First White Space Wireless Broadband Network
October 28, 2009
Claudville.
The beginning of the end of the rural digital divide.
This is what kept running through my mind as I sat in room 2103 of the Rayburn office building next to the US Capital. I sat spellbound listening to the school children in Claudville, Virginia, sandwiched between FCC commissioners, members of the press, representatives of Dell and Microsoft, Rep. Rick Boucher (D-VA), Chairman of the House Communications, Technology, and the Internet Subcommittee, and, of course, folks from Spectrum Bridge and the TDF Foundation.
It seemed this was the beginning of the end of the great digital divide for the un-served and under-served populations of this country. An affordable, reliable wireless broadband alternative to dial-up for the rest of America.
Spectrum Bridge successfully created the first white space wireless broadband network and connected the Appalachian community of Claudville, VA to the rest of the internet. Utilizing the spectrum abandoned by the digital TV transition, they were able to deliver a reliable broadband wireless connection of around 8 MB per second while transmitting the signal over 1.5 mile between antennas.
This was financially possible thanks to a generous grant from a foundation set up by our very good friends and co-investors at TD Fund. Additionally, Microsoft and Dell provided the computer hardware to run the network and provided six laptops to the school. Finally, the years of a slow, painful dial-up connection were finally over for the residents of Claudville.
While that may in itself have been interesting, it was the way the network was constructed that is truly revolutionary. Spectrum Bridge, utilizing their White Space database and proprietary spectrum management systems, constructed the wireless network over the white space spectrum, which has never been done before. They were able to give a licensed spectrum experience to the students and residents of Claudville, over the spectrum previously used by analog TV transmission.
This new technology from Spectrum Bridge will finally allow rural areas previously under- or un-served with high speed broadband connectivity to be connected at an affordable cost. As I listened to the school children excitedly discuss how this was going to help them in school as well as in life and how the administrator of the school was going to now be able to reach all the students in the outlying areas with distance learning programs, I could not be more proud of what Spectrum Bridge had accomplished.
What others are saying:
Stacey Higginbotham at GigaOM
Erica Naone at MIT Technology Review
Lynette Luna at FierceWireless
Simple Spectrum Bridge schematic
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