This year is shaping up to be the biggest for VCs deals in a decade--with a flurry of from activity well-known startup backers and a new breed of investor. What follows is a list, entirely subjective, of those with outsized influence.
Marc Andreessen and Ben Horowitz
This duo has been going at it since they teamed up in the mid-1990s at Netscape Communications--the company that ushered in the first Internet boom, fought a monstrous antitrust battle with Microsoft, and turned Andreessen into a celebrity. That led to Loudcloud, which led to Opsware, which they sold to Hewlett Packard in 2007 for $1.6 billion.
Next came Andreessen Horowitz, the VC firm, in mid-2009, and these guys are raising money and funding companies like mad ($1.2 billion now under management). Some investors complain that they’re investing at overly high valuations, but it's certainly not slowing them down. Added to their portfolio in 2011: Fab and
Pinterest, two of the fastest growing consumer properties; cloud powerhouse Box.net; and Airbnb. Other stakes include Groupon, Foursquare and newly public Zynga.
My favorite Andreessen-Horowitz play of 2011 involves a little Internet payback. Andreessen and team sold Skype--which they'd bought control of with a group of investors in 2009--to
Microsoft for $8.5 billion. Andreessen and his team more than tripled a $50 million investment in 18 months.
If there's an early stage bubble going on , Dave McLure could be in trouble. He and his fund, the incubator 500Startups, have backed about 125 companies this year alone, fueling the dreams of hundreds of aspiring entrepreneurs with checks averaging $50,000.
McClure's model has drawn its share of criticism, but incubators like his are spotting and nurturing some gems. Y Combinator, the granddaddy of all incubators, has funded more than 380 startups in all. It claims Dropbox and Airbnb as alums--both of which scored new funding at billion-dollar valuations in 2011.
McClure himself remains a great motivator, ever-present at conferences and always pushing young people.
LinkedIn, which Hoffman founded, went public in May, and, poof, his 21.7 percent stake was suddenly worth more than $1.6 billion. The stock has slid since then, but Hoffman--already wealthy from eBay's purchase of PayPal, where he was an executive vice president--is doing just fine.
Hoffman, one of the most plugged-in people in Silicon Valley, is currently on the board of freshly public Zynga. He's been a partner with Greylock Partners since 2009, and his portfolio includes such eye candy as Groupon, Airbnb, and Gowalla, which was just bought by Facebook. Somehow it feels as though Hoffman, who's 44, is just getting started.
The guy from Accel Partners who usually tops these sorts of lists is
Jim Bryer, who's on the board of Facebook.
So what's up with Ping Li? Two words: big data. That's a bit of a buzz phrase nowadays used to talk about all the data businesses and consumers are generating by the nanosecond and the opportunity to make sense of it all. In November, Accel carved out $100 million to create the Accel Big Data Fund, and Li is the key partner investing the money.
I've heard the Big Data Fund criticized as a marketing effort because Accel hasn't raised new money. But Li, who's been with Accel since 2004 and has already made smart cloud computing investments, dismissed such talk, arguing that he's undertaking a big effort to fuel innovation around big data. And while this might not be as sexy as another app play, the payoff should be bigger. "An entirely new ecosystem of companies is going to be built," said Li.
The co-founder of PayPal is worth highlighting if for no other reason than he was the first outside investor in Facebook and is now a billionaire. But Thiel is also an intellectual agitator who is constantly doing offbeat things. Exhibit A is the floating technology incubator 12 miles off the Northern California coast that he recently helped launch.
He's a constant critic of small thinking and what he sees as a dearth of important and innovative startups. "What happened to the future?" is the title of the mission statement for his venture firm, Founders Fund , which is now reportedly raising $600 millionfor its fourth fund. The statement's opening line: "We wanted flying cars, instead we got 140 characters." Despite which, Thiel does have a Twitter account--one that perversely demonstrates his influence. Tweets by @peterthiel to date: Zero. Number of followers: 4,674.
It's not just his firm's early and shrewd investments (Zynga and Twitter and Tumblr, among many more). Wilson is widely followed and appreciated for his writing. Read his blog regularly, especially his MBA Mondays posts--Burn Rates: How Much? is a great recent example--and you'll learn a ton about business and what makes him so successful and how venture investing works.
Naval Ravikant and Babak Nivi
Entrepreneurs Ravikant (shown here) and Nivi created AngelList in February 2010 to help open up the clubby world of startup financing. The site has become a sort of LinkedIn for entrepreneurs and investors looking to connect. To date, more than 500 startups have successfully used AngelList to land funding from some of its 3,000 member-investors.
In 2011, AngelList quintupled its volume. It's also enabling new startup hubs around the country. A map of startups and investors connected through AngelList lights up not just Silicon Valley and New York, but Florida, Oregon and Arizona. Plenty of big VC shops--Kleiner Perkins Caulfield & Byers and Andreessen Horowitz among them--now use AngelList to hunt for deals.
While Sequoia Capital led the first investment in LinkedIn in 2003 and is backing startup hotshots
Dropbox, the firm has missed out on four of the biggies of the social Internet: Facebook, Twitter, Groupon, and Zynga.
Those companies get most of the ink and pixels, but Sequoia is going strong with enterprise companies, and for that Doug Leone, who's been with the firm since 1988, deserves a nod in 2011. Sequoia-backed Jive Software just had a successful IPO; up next could be ServiceNow, a 7-year-old cloud business that's disrupting the $14 billion IT operations market. It has 500 employees, a reported $130 million in revenue, and recently brought on the much-respected Frank Slootman as CEO.
Leone, who serves on ServiceNow's board, told me that the company has so far rebuffed investment bankers eager to take the company public and has intentionally kept a low profile. "Now it's time to make noise," he said. "It's going to be a very large company." OK, Leone. We'll be listening.
Kleiner Perkins is longtime king of Sand Hill Road, with a powerful roster of celeb partners like Mary Meeker and Al Gore. Bing Gordon, a longtime executive with Electronic Arts who joined Kleiner in 2008, is the lead investor in Zynga, where he sits on the board and has been a close operating partner with founder and CEO Mark Pincus. Kleiner owns an 11 percent stake.
Gordon also made an early investment in Katango, a social startup that Google bought in November and merged into Google+. He also launched the $250 million sFund, which is a Kleiner fund focused on the social web.
Khosla, a co-founder of Sun Microsystems and longtime partner with Kleiner Perkins, has been big Silicon Valley player for ages. When he peeled off from Kleiner in 2004 to create Khosla Ventures, it was mainly to invest in green tech. But he's switched courses a bit, and has made investments in consumer plays such as Square and Jawbone.
In October, Khosla closed a $1.1 billion fund that's funding half cleantech startups and half Internet/mobile companies. That's a monstrous fund these days, but Khosla—who recently boasted that he's generated close to $1 billion in profits across all his funds--didn't seem to have much trouble.
A bass player by night and venture capitalist by day, Chang is
the first venture investor to understand gamification and how it could be applied across industries. His early investment in Playdom, when Chang was at Norwest Ventures, was validated when
Disney bought the company in 2010 for $563 million.
Such successes made him a target for rival firms, and in September Chang jumped to Mayfield, where he's looking for new ways to exploit gamification. "This is just getting started," said Chang. "We're still figuring out what industries it fits with."
Chang, ever the data nerd, is a proponent of what's known as the "quantified self"--basically, the notion of living by numbers--and that's led him to investments this year in such companies as Mybasis, which creates a device for keeping track of your health. It's all cutting edge stuff, and Chang is at the forefront.
Google Executive Chairman Eric Schmidt recently made news by saying that Google plans to keep buying companies at a pace of one a week. Well, get this:
Google Ventures is investing in an average of two startups a week. Moreover, Google has doubled down in 2011, raising the amount of capital it allocates to Google Ventures to $200 million from $100 million.
Bill Maris is the guy leading the charge. His team of 43 people--most with company building chops--operates separately from Google, although they borrow Google people for expertise and coaching. They invest in anything with a tech bent--mobile, cloud, media, even life sciences.
Maris and Google Ventures are out to change the traditional VC model, which traditionally was more about high-level help and a golden Rolodex (old-fashioned reference intentional). By contrast, Google Ventures runs a startup university, holds tech talks, and its people get under the hood, even helping startups with code. "We're trying to keep our heads down and be the Googlest fund out there," Maris told me. Yup, he said "Googlest."