Former Seagate CEO joins investment trend

First it was yachts, then private jets. Now, the hobby for semi-retired Silicon Valley executives seems to be the personal venture capital business.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
Michael Kanellos
2 min read
LAS VEGAS--First it was yachts, then private jets. Now, the hobby for semi-retired Silicon Valley executives seems to be the personal venture capital business.

Al Shugart, founder and former chief executive of Seagate Technologies, is at Comdex to promote Al Shugart International (ASI), a firm dedicated to capital investing. The firm has already created one $5.3 million fund and is working on forming a second fund that will invest between $5 million and $20 million in various companies.

Jon von Bronkhorst, a former analyst at BancBoston Robertson Stephens, manages the fund.

With the firm, Shugart joins a growing trend of executives who have chosen to eschew the stress of a day job and participate in the booming opportunities for start-ups.

Other investors who have created or are kicking off their own funds include former Netscape CEO Jim Barksdale; Atiq Raza, the former chief operating officer of AMD; and Dave Epstein, who founded Raycer Graphics, which Apple Computer recently bought. Joe Firmage, the under-30 former CEO of USWeb/CKS, has also formed his own firm called IntendChange.

Start-up investing, of course, differs from the traditional hobbies of the independently wealthy. Shugart states that one of the main purposes of the firm is to have "fun." He even wore a Hawaiian shirt to the interview.

Still, the group is clearly motivated to turn a profit and has drawn major outside investors. Wilson, Sonsini, Goodrich and Rosati, the powerhouse Silicon Valley law firm, has invested in the company and performs its legal work.

The firm's main focus in many ways lies in the doors it can open for small companies, Shugart and Bronkhorst said.

"We have contacts in Malaysia or wherever," Shugart said. "Our 10 employees probably know everyone in the world."

Those connections are certainly generating leads. One of the companies that ASI has invested in, V Packet, was referred to ASI by a car salesman that Bronkhorst knows. Another firm, E-Cargo, was recommended "by a brother-in-law of my best friend," he said.

Comdex: Closing the millennium Unlike so-called incubator firms, ASI does not provide office space or hands-on management, Bronkhorst said. At the same time, the firm remains small enough to give dedicated attention to its companies. Established VC firms, by contrast, are managing vast amounts of money over a wide range of companies.

ASI invests in firms through two different avenues. First, it will place direct investments, either from the partnership as a whole or through a separate corporation, which is also a member of the overall investment partnership. Second, the firm provides public relations for equity, rather than hourly fees.

"I like PR. I liked it at Seagate," Shugart said. "When I got fired from Seagate, I had a few investments, but I thought of doing PR in exchange for equity."

He talked to Bronkhorst, who then persuaded him to do full-fledged VC partnership. Bronkhorst then left BancBoston to run its financial arm.

"It's a blast," said Shugart.