Posts Tagged ‘Sequoia Capital’

Article from PEHub.

If there is good news to be had in private equity these days, it is that limited partners seem to want to put new money to work.

Several recent studies have pointed in this direction, including one from Preqin, which found that a large number of endowments, public pensions, family offices, sovereign wealth funds and foundations want to invest in the coming year.

The top area of interest is buyouts. Second on the list is venture capital. Almost half of potential investors name venture as an asset class they will consider, Preqin says in a report issued this month.

This is welcome news to the industry. That’s because there is no shortage of funds out looking for cash. Preqin, in its study, finds 372 venture capital funds on the road, or nearly a fifth of all private equity funds on the fundraising trail. Together they seek $47.2 billion in commitments.

Many GPs will argue that consistency is their forte. But only some can truly make that claim, the study finds. Preqin assembled a list of the most consistent performers in venture based on IRR, fund year, strategy and geography. Only active managers that have three or more funds with a similar strategy are included and still formative 2010, 2011 and 2012 funds are not included.

Tied at the top of the list are Benchmark Capital, GGV Capital, Pittsford Ventures Management and Sequoia Capital, with the strongest record of top quartile funds. The list from the report is reprinted below.

(Editors note: The average quartile rank in the table is determined by scoring each fund. A top quartile fund gets a “1” and a second quartile fund gets a “2,” etc. The ranking is an average. Photo above courtesy of Shutterstock.)

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Article from SFGate.

Funny or Die, the comedy website founded by Will Ferrell, is pointing the way for Web-based entertainment companies by combining the scrappiness of an Internet startup with A-list talent that attracts viewers.

What started as a lark for Ferrell and writing partner Adam McKay has become a profitable company, with revenue approaching $30 million this year, according to a person with knowledge of the Los Angeles business.

Funny or Die’s third show on cable TV, “Billy on the Street,” started last week on Fuse network. The first feature film, “Funny or Die Presents Tim and Eric’s Billion Dollar Movie,” premieres at the Sundance Film Festival in January.

“Somebody is going to figure out the strategy of marrying traditional media to this new-media model, to the way people are now consuming content, on a massive scale,” Funny or Die Chief Executive Officer Dick Glover said. “We’re doing it in our little world. We’re doing OK.”

Since the dawn of the Internet, entertainment companies have struggled to make money on the Web. Walt Disney’s interactive unit has lost money for 12 consecutive quarters. The company said Nov. 7 that it formed a partnership with Google’s YouTube to create short, family-friendly videos. YouTube is investing about $100 million to add channels in collaboration with celebrities such as Amy Poehler, Ashton Kutcher and Shaquille O’Neal.

Mark and Michael Polish, the writer-director team behind “Twin Falls Idaho” and “The Astronaut Farmer,” have turned a modest profit from “For Lovers Only,” a feature they started on Apple’s iTunes and video on demand.

“The bottom line is, you have to have the right product because you really depend on word of mouth,” Mark Polish said. “Are they going to like it and link it to Facebook or tweet it?”

‘Landlord’ pulls traffic

Funny or Die’s ethos was established with its first Internet video, “The Landlord.” The two-minute sketch featured McKay’s 2-year-old daughter, Pearl, as a foul-mouthed landlady who intimidates a tenant played by Ferrell. Shot with no budget in 60 minutes at Ferrell’s house, “The Landlord” attracted 78 million views, according to the website.

The success generating traffic enticed stars willing to work for free for the exposure Funny or Die gave them with young, Web-savvy audiences. The money came later, as marketers bought ads on the site and film studios hired Funny or Die to create videos for the stars of upcoming films.

Funny or Die is backed by Sequoia Capital, the Menlo Park venture capital firm that has put $15 million into the company. Owners also include Ferrell and McKay’s production company, Gary Sanchez Productions, director Judd Apatow, HBO and Creative Artists Agency.

“The Landlord” remains the website’s most-watched, followed by a Justin Bieber sketch that drew 40.8 million views, according to rankings on funnyordie.com.

“We walked into Funny or Die looking at it as a clubhouse for our friends,” McKay said. “The quality didn’t have to be that high. It could be goofing around. What we didn’t anticipate was how much people would like that approach.”

Website ads account for about two-thirds of revenue. The rest comes from branded entertainment, 50 or so videos the company is hired to make each year to promote movies and products. The site has kept its credibility with fans by maintaining tight control over the creative process. Typically, the only reference to the product being promoted is made at the tail end, after the sketch is over.

Moving to movies

“Tim and Eric’s Billion Dollar Movie,” the first feature film under the Funny or Die brand, stars frequent collaborators Tim Heidecker and Eric Wareheim. In the picture, two friends get a billion dollars to make a film, the biggest budget in history, only to see the project fall apart. Ferrell also appears, and Gary Sanchez Productions and Mark Cuban’s 2929 Entertainment are among the backers.

“Tim and Eric’s Billion Dollar Movie” will be offered through video on demand and for sale at Funny or Die’s site on Jan. 27, and it will reach theaters on March 2, according to the duo’s website.

“Billy on the Street” features comedian Billy Eichner approaching New York pedestrians with questions about pop culture. The company’s other shows on cable are Comedy Central’s “Jon Benjamin Has a Van” and HBO’s “Funny or Die Presents.”

Funny or Die can charge $100,000 or more for custom-made videos and promotional campaigns, fees that include salaries for staff and payment to the stars, said the person, who declined to be named because the company is private.

“There’s an idea that young people reject advertising,” Glover said. “That’s not true. They reject bad advertising. They love advertising that talks to them in a certain way.”

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/12/26/BUSJ1MFPA0.DTL#ixzz1hvEx9sQU

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Article from GigaOm.

“Wireless technology provider Ubiquiti Networks Inc recently became the latest infrastructure company to file for an initial public offering. Boingo Wireless went public in May and Fusion i-o followed this month.

On Wednesday, Sequoia Capital’s Michael Goguen noted the renewed interest in this space during a panel at GigaOM’s Structure conference: “To me, being a guy investing in infrastructure for 15 years, it’s an exciting time for the first time in a while,” he said. “There was a period where there wasn’t a whole lot going on. Architecture was stable, and big vendors dominated.” But now, the emergence of the cloud has caught big vendors “rather flat-footed,” he said. “There are a whole lot of holes to fill and room for startups.”

Ubiquiti, based in San Jose, hopes to fill some of those holes. The company filed paperwork last week with the U.S. Securities and Exchange Commission for an initial public offering and is looking to raise up to $200 million. Details are scant. The company hasn’t revealed information on stock price or timing, saying only in its  S-1 filing that the funds would be used to bulk up working capital and “general corporate purposes.”

Ubiquiti is focused on providing wireless-networking solutions in under-served areas, such as emerging markets. Its products include radios, antennas and management tools that have been designed to deliver carrier class performance for wireless networking.

The news of the filing comes the same week the National Venture Capital Association and Deloitte & Touche LLP put out a global survey showing VC’s the world over believe the level of IPO’s is too low to support the industry. But perception and reality can be two different things, Goguen said.

“In the last six months, there have been 33 technology companies going public for a total of more than $16 billion in exists,” he said. “Things are clearly picking up.” It’s still too soon to tell how things will pan out, especially considering that the results of the two most recent IPOs are mixed. While Fusion is exceeding expectations on the open market, Boingo’s stock price has dropped 40 percent since its opening.”

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Article from NYTimes.

“What if you threw a $41 million party and nobody came? A start-up company called Color knows how that feels.

In March, Color unveiled its photo-sharing cellphone application — and revealed that it had raised $41 million from investors before the app had a single user. Despite the company’s riches, the app landed with a thud, attracting few users and many complaints from those who did try it.

“It would be pointless even if I managed to understand how it works,” one reviewer wrote in the Apple App Store.

Since then, Color has become a warning sign for investors, entrepreneurs and analysts who fear there is a bubble in start-up investing. They say it shows that venture capitalists, desperate to invest in the next Facebook or LinkedIn, are blindly throwing money at start-ups that have not shown they can build something useful, much less a business that can provide decent returns on investment.

Color, which says it is overhauling its app, is just one of the start-ups that have set tongues wagging about bubbly excess in Silicon Valley. The Melt plans to sell grilled-cheese sandwiches and soup that people can order from their mobile phones. It raised about $15 million from Sequoia Capital, which also invested in Color.

Airbnb, which helps people rent rooms in their homes, is raising venture capital that would value it at a billion dollars. Scoopon, a kind of Groupon for Australians, raised $80 million; Juice in the City, a Groupon for mothers, raised $6 million; and Scvngr, which started a Groupon for gamers, raised $15 million. These could, of course, turn out to be successful businesses. The worry, investors say, is the prices.

They say they have paid two to three times more for their stakes in such start-ups over the past year. According to the National Venture Capital Association, venture capitalists invested $5.9 billion in the first three months of the year, up 14 percent from the period a year earlier, but they invested in 51 fewer companies, indicating they were funneling more money into fewer start-ups.

“The big success stories — Facebook, Zynga and Twitter — are leading to investing in ideas on a napkin, because no one wants to miss out on the next big thing,” said Eric Lefkofsky, a founder of Groupon who also runs Lightbank, a Chicago-based venture fund with a $100 million coffer.

A decade ago, in the first surge of Internet investing, it was not unusual for tech start-ups to raise tens of millions of dollars before they had revenue, a product or users. But venture capitalists became more cautious after the bubble burst and the 2008 recession paralyzed Silicon Valley.

Meanwhile, it now costs less than ever to build a Web site or mobile app. So this time around the general philosophy has been to start small.

“By starting out lean, you have the chance to know if you’re on to something,” said Mark Suster, a managing director at GRP Partners. “If you start fat and the product concept doesn’t work, inherently the company will lose a lot of money.”

Two of Color’s photo-sharing competitors, Instagram and PicPlz, exemplify the lean start-up ethos. They started with $500,000 and $350,000, respectively, and teams of just a few people. As they have introduced successful products and attracted users, they have slowly raised more money and hired engineers.

Color, meanwhile, spent $350,000 to buy the Web address color.com, and an additional $75,000 to buy colour.com. It rents a cavernous office in downtown Palo Alto, where 38 employees work in a space with room for 160, amid beanbag chairs, tents for napping and a hand-built half-pipe skateboard ramp.

Bill Nguyen, Color’s always-smiling founder, has hired a team of expensive engineers, like D. J. Patil, a former chief scientist at LinkedIn.

“If I knew a better way of doing it, I would, but that’s what my cost structure is,” Mr. Nguyen said in an interview last week.

Michael Krupka, a managing director at Bain Capital Ventures and one of Color’s investors, said Color needed to raise a lot of money because it planned to do much more than photo-sharing.”

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Article from NYTimes.

“For Reid Hoffman, the chairman of LinkedIn, it took less than 30 minutes to earn himself an extra $200 million.

With the hours ticking down to his company’s stock market debut, Mr. Hoffman dialed into a conference call from San Francisco’s Ritz-Carlton hotel as his chief executive, Jeff Weiner, and a team of bankers raced up from Silicon Valley in a black S.U.V. to meet with potential investors.

Demand for shares was intense, and they decided to raise the offering price by $10, to around $45.

When trading began on May 19, LinkedIn did not open at $45. Or $55. Or $65. Instead, the first shares were snapped up for $83 each and soon soared past $100, showering a string of players with riches and signaling a gold rush that has not been seen since the giddy days of the tech frenzy a decade ago.

Now there are signs that a new technology bubble is inflating, this time centered on the narrow niche of social networking. Other tech offerings, like that of the Internet radio service Pandora last week, have struggled, and analysts have warned that overly optimistic investors could once again suffer huge losses.

That enthusiasm was on full display in the blockbuster debut of LinkedIn, which provides a window into how a small group — bankers and lawyers, employees who get in on the ground floor, early investors — is taking a hefty cut at each twist in the road from Silicon Valley start-up to Wall Street success story.

“The LinkedIn I.P.O. will be used very powerfully over the next year as these companies go public and bankers deal with Silicon Valley,” said Peter Thiel, the president of Clarium Capital in San Francisco and an early investor in PayPal, LinkedIn and Facebook. “It sets things up for the other big deals.”

The sharp run-up after the initial public offering set off a fierce debate among observers about whether the bankers had mispriced it and left billions on the table for their clients to pocket. But the pent-up demand for what was perceived as a hot technology stock set the stage for easy money to be made almost regardless of the offering price.

Naturally, Wall Street is enjoying a windfall. Technology I.P.O.’s have generated nearly $330 million this year in fees for the biggest banks and brokerages, nearly 10 times the haul for the same period last year, and the most since 2000.

Besides the $28.4 million in fees for LinkedIn’s underwriting team, which was led by Morgan Stanley, Bank of America and JPMorgan Chase, there were also a few slices reserved for specialists like lawyers and accountants. Wilson Sonsini, the most powerful law firm in Silicon Valley, collected $1.5 million, while the accounting firm Deloitte & Touche earned $1.35 million.

Mr. Hoffman founded LinkedIn in March 2003 after making a fortune as an executive at PayPal, the online payments service, but even as LinkedIn grew and other employees and private backers got stakes, Mr. Hoffman retained 21.2 percent, giving him more than 19 million shares when it went public. He has kept nearly of all them, so for now his $858 million fortune — it was $667 million before the last-minute price hike — remains mostly on paper.

Mr. Weiner arrived more recently, in late 2008, after working at Yahoo and as an adviser to venture capital firms, but his welcome package included the right to buy 3.5 million shares at just $2.32. And they are not the only big winners who secured shares at levels far below the I.P.O. price.

For example, when LinkedIn raised cash in mid-2008, venture capital firms including Bessemer Venture Partners and Sequoia Capital, scooped up 6.6 million shares at $11.47 each in return for early financing. They have held on to the stock, but Goldman Sachs, which got 871,840 shares at $11.47, sold all of it for a one-day gain of nearly $30 million.

Scores of fortunate individuals also managed to profit.

Stephen Beitzel, a software engineer, worked at LinkedIn from its founding until March 2004, but kept his stock when he left. His shares are now worth $17 million, and he sold $1.3 million worth in the offering.”

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