We are very happy to announce that we have co-lead an investment with our friends at Canaan Partners in Orchard – a company that is squarely focused on the online lending space.
Matt Burton, the co-founder and CEO of the company, was a very early employee and a rising star at Admeld. Soon after Google’s acquisition of Admeld, he had a bunch of time in his hands. So he started dabbling in Lending Club.
In our first meeting, a couple of months after he left Google, he had retained the help of his co-founder Angela Ceresnie - and the two were developing models to invest their own money more effectively. He had also started to manage a growing number of other accounts for his friends. It had gotten so unwieldy that Matt was thinking about building software to make it easier for himself and maybe setup a fund as a business.
The next time I saw Matt, he had already assembled a great team of co-founders, and they had big ideas on how lending marketplaces would evolve and how they wanted to lead that change.
Financial Services industry is already going through a major transformation. The onslaught of innovation has already started in lending, credit, trading. Even the sovereign currency system is under attack by young smart companies. Orchard has just joined the battle and we are very excited to be part of their journey.
Today, we are very happy to announce our investment in Superpedestrian – a company that is looking to revolutionize urban travel. I have been a huge fan of Assaf and Carlo and their groundbreaking work at the SENSEable City Lab at MIT. Some of you may have heard of their amazing creation - the Copenhagen Wheel - especially if you were a fan of the show Weeds. With an MIT license, Superpedestrian is the official home of the Copenhagen Wheel.
In this new era of crowd-funded consumer electronic start-ups, a 3D printer and some knowledge of electronics may lead to magical products. And some of these products may garner popular interest and create brand new categories. But, taking these products to market in many cases requires their creators to think through and innovate in areas beyond their initial inspirations. It requires a lot of hard work and capital.
The Copenhagen Wheel already has a cult-like following and Assaf and his team have been very hard at work to commercialize their creation into a safe consumer grade product. We are very excited to have the opportunity to lend the team our capital and our support to take this product out of the labs and into a reality.
If you are ever in Cambridge, you might want to stop by at the Superpedestrian World HQ and take a ride in one of their pre-production bikes.
Today is a big day for Adap.tv. I would like to congratulate Amir, Teg, Toby, Tim, Sean and the whole Adap.tv team for building such a great company.
AOL had been a great partner from very early on. So it was not a surprise when they came calling at the eve of our S-1 filing. This should be a very strong strategic acquisition for them. In Adap.tv they get an amazing team, a fast growing company, a strong technology platform and a big marketplace of buyers and sellers which should prove critical as AOL looks to extend beyond its own audience network.
We have been investors in Adap.tv for almost 5 year now with our friends at Gemini Israel Ventures, Redpoint Ventures and Bessemer Venture Partners. I don’t think it would be stretch to say that we have been through a lot together.
I feel very fortunate to have gotten the opportunity to work closely with everyone and especially with my friend Amir. I have learned a lot from his leadership, his fighting spirit and his healthy skepticism.
I am sorry our journey had to end here, it is obviously hard not to wonder what could have been. The silver lining is that I don’t have to be in the audit committee anymore. Congratulations again to everyone!
I called Amit last Wednesday soon after the acquisition announcement. We had been happy investors in Lexity for almost 2 years now since we led the Series A with our friends at True Ventures.
Amit was at a Yahoo conference room with the whole Lexity team, getting briefed by HR on roles, benefits, getting their pictures taken for their IDs and planning their move out from the Lexity World Head Quarters to the Yahoo! Complex. It all sounded like a well thought out, expeditious process but I admit it was hard to hear.
I would like to thank Amit and his whole team (for our investors and personally) for all their hard work and wish them all success in their new roles. It is sometimes difficult to see a company get sold a bit prematurely especially when they are hitting their stride, numbers starting to look like that elusive hockey stick with so much to look forward to.
In this case I think Yahoo! got a really great product, an exceptional team and a visionary in Amit that may potentially help revitalize the oft overlooked asset inYahoo! Shopping.
We are very happy to announce that we have co-led an investment in Oculus VR with our friends at Matrix Partners.
I met the founder of Oculus, Brendan Iribe for the first time, at Westin San Francisco Airport. Brendan had to catch an afternoon flight from Irvine in short notice. I was not too happy to have changed my afternoon flight back to Boston to a red eye, either.
The meeting did not start very smoothly: our meeting room with all the demo hardware was locked. Then the PC, the keyboard and mouse in that order gave up a few times. So when I first put on the prototype Rift, I was not expecting too much.
Was I wrong - it was an amazing transformational experience. For the next 10 minutes I could not find anything more intelligent to say than ‘wow’. The world had apparently come a long way since my first experience with virtual reality - Virtual Pompeii - circa 1995. All I can think of soon after - and for the next few weeks - were all the possibilities and what I would have to do to convince Brendan (and my partners) to be investors in this amazing company.
Now that we are, I am so looking froward to the our adventure together.
“We need to be angry and empathize with the victims without being scared. Our fears would play right into the perpetrators’ hands — and magnify the power of their victory for whichever goals whatever group behind this, still to be uncovered, has. We don’t have to be scared, and we’re not powerless. We actually have all the power here, and there’s one thing we can do to render terrorism ineffective: Refuse to be terrorized.”—
I have had a very pleasant trip to Turkey not too long ago. I spent most of my time with the family and eating my favorite Turkish food. In between all the eating, I could not help notice how far Turkey had come over the last 10 years under the AKP regime. It was quite astounding actually, the economy is booming:
Tax revenue is high, foreign investment is pouring into the country, unemployment is low and the sovereign borrowing rate is very favorable - lowest it has ever been. People seem happy and on the streets enjoying life. I was told that the AKP party gets over 51% of the votes in a general election but has over 70% approval rating. Those who don’t vote for Erdogan mainly do not approve his foreign policy or fundamentalist views but agree with his economic policies.
A couple amazing tid bits:
Most school kids have Android tablets with all their school books. Teachers get grants to write new learning programs and the plan is to have 100% of all school age kids on this program by end of 2013.
All medical records are electronic and the nationalized health care system works well. You get to your assigned doctor to get dispatched to a specialist if needed. Your prescription is available at any pharmacy of your choice all for $5 equivalent. ALl you need is your national identification card.
I am sure my information is spotty at best but there is no denying that something special is going on there.
Think twice before you stay at Gansevoort Park Avenue NYC
They have a very bizarre policy in the summer to limit the A/C use. The thermostats in the room are programmed to go only to 75 degrees no matter what temperature you set. Here is the message I sent to the night manager, he is actually a nice guy.
Hi XXXXXX –
This is Santo Politi from Spark Capital. I was hoping to talk to you before I left but I did not see you. It sounds like you asked your hotel manager to see me before I leave but I could not talk to her either as I had to leave for a meeting. You have been extremely nice to me in all my stays at your hotel and I wanted you to know that I really appreciate it. The A/C problem in the guest rooms on the other hand have been persistent and I finally came to the realization that this is not a problem with your systems but a hotel policy – for some reason to conserve energy your disregard your guests’ comfort and limit the use of A/C to a min of 75 degrees – so it was not a surprise to me when you confirmed this as I was checking out.
You have to understand how disturbed and angry I am about this. In my last stay there, I spent $587.57 for the night but did not get a good night’s sleep because of this bizarre policy, and as you know this is not the first time. Limiting the A/C is no different than telling your guests to limit their use the bathroom or not to turn on the lights in the room etc., it just does not make sense. I’d appreciate if you can send me a copy of the room contract where it states that guests are not entitled A/C use. If this is not part of your guest contract, I just want to make sure that you make it a policy to disclose it to every guest that checks in – just like you disclose when they are staying in a non-smoking room there is a penalty if they smoke, you should tell them that they are not allowed to lower room temperature below 75 degrees even if they wanted to.
I am not sure if you can do much about this, but I intend to do the little I can and at least take your suggestion in the hotel receipt and write a review on Tripadvisor.com (and other travel sites). At least if anyone considering to stay at your hotel happens to read my review, they’d have a chance to decide for themselves if they would want to sleep in a hot hotel room in the summer of NYC.
I am very disappointed how the Facebook IPO went down. It is still not clear where it went wrong but between NASDAQ’s failure, the last moment share increase and the selective disclosure issues, there is enough blame to go around. I am still very bullish on the company and I hope the “lower revenue growth” for the year is just a hoax.
I am more worried about the aftermath though, this was the big one we were all waiting for and the outcome is not at all what we expected. The last thing we want is for (individual and institutional) investors to lose their confidence and not invest in this one area of the economy that is genuinely growing and has the strength to be truly transformational.
Facebook IPO is only a couple of days away and I am very excited. I am in the “extremely bullish” category, I fully expect the stock price to double post IPO and perform well over the long term.
Apparently the order book is very strong. I heard that some of the recent NASDAQ pullback is due to public investors, like mutual funds, taking money out from existing positions to re-allocate funds to the IPO [I guess that makes sense, since the capital inflows into mutual funds is not what it used to be].
Post-IPO though, I am not sure if I’d want to hold on to the stock for too long. First there is the RSU related tax liability that shows up in six months. The company potentially has an uncapped tax liability in its books and the magnitude will depend on how well the stock trades.
So if I am hedge fund manager, I would buy up the stock, help drive the price up, then turn around and short it. If the stock is up significantly, there will definitely be a secondary in the next few months to cover the tax liability and ample opportunity to cover shorts.
In the mean time, NASDAQ announced that they will not wait the customary year to include FB in their index which means any fund manager that gets compensated to beat the index and any index fund or ETF would have to own the stock.
And then there is Facebook as a public company - I would like to get a better sense of their posture. Will they continue to be aggressive and (boldly) acquire platforms and technologies to increase their dominance?
If I can get an allocation at the IPO, I may turn around and sell in a day or two, then wait for the stock to settle. I would look to add it back to my portfolio and ride it up (to a trillion dollars - there I said it) in a month or two.
Like most venture funds, we often see some very interesting companies building truly life altering technologies. These companies usually require significant capital investment before they take their innovation out of an (MIT) lab and turn it into a first viable product.
In the current investment environment, where most dollars are chasing the ‘social’ breakouts, finding an interested party or two for a big capital intensive idea is very difficult. Finding follow on investors is even more difficult.
So my partner Bijan had a great idea - why not get back to the old model? Many of the early venture funds, at the time, were investors in big hits like Apple and Amgen. The early funds did not have enough capital themselves to satisfy their companies so they all chipped in.
Today the problem is different. Funds are much larger but the risk reward model for these types of companies is very different. Why not apply the same risk reward model of angel investing into capital intensive companies?
Instead of the traditional 2 firms doing the initial financing, 5 to 8 do it together from the beginning and limit the damage if it was really a science project or benefit together if it was not. I think the math would work too.
Let’s say 10 funds each invest $10M over various rounds into a capital intensive company together for a total $100M. At exit, if the company is valued at $1B and the management team owns 30% , then each fund would get a return of $70M for their investment.
If this investment is the only successful company in a portfolio of 10 capital intensive companies for the fund, to break even, you would need to have aborted the rest of your 9 unsuccessful investments after investing no more than $6.67M for each.
Most likely, much like a seed investment, $1M to $2M per investor (that’s $10M to $20M to the company) should be sufficient to tell the winners. The result is $42M profit on $28M (1x$10M+ 9x$2M) of investments. If you have an additional winner, now your portfolio should start looking like a venture portfolio.
I had a funny experience flying United to San Francisco yesterday. Like most, I have permanently switched to Virgin for the excellent service and inflight Internet. I had to get to San Francisco early, so Virgin was not an option.
It all started with the pre-flight video featuring the new United CEO. He espoused great customer service above all, while the experience to that point and throughout the rest of the flight felt like that was the least of their concerns. The plane itself was a throwback to the 80’s - warn down seats, little or no leg room, full seats of unhappy customers.
I am sure there are lengthy reasons for the current state of airlines, from skyrocketing fuel coasts to unions but I can’t imagine anything that has contributed more profoundly to their current state than their actual lack of focus on customer service.