Most venture capitalists don’t understand tagging, blogs, rss, ajax, or the two way web. They scoff at social bookmarking sites and think podcasting is a fad (maybe it is). They desparately “want in” to this renaissance of the web, but can’t be bothered to open up the simplest RSS reader and understand the power of decentralized content. In short, they don’t get it.
Most traditional VC funds have a single web-focused partner, who may or may not be interested in web 2.0 consumer companies. For the most part, these VCs are not part of the most interesting deals. If they do get what you are pitching, they want to pump way more money into the company than makes sense.
Here’s my attempt to point out the venture capitalists who do get it. Some of these have new funds and only recently became venture capitalists. Some of them have been around forever. There are just two personality traits all share. First, they understand that a fundamental shift has occured in web evolution. Second, they are hungry as hell to find deals, and spend more time proactively looking for the next opportunity than they do sitting back and looking at the business plan stream that naturally flows into any venture fund.
This list is purely subjective. It’s blatantly biased. Some VCs don’t belong and many who do are left off. But it’s a list, nonetheless, that I’ve come up with over the last few weeks of interviewing entrepreneurs, venture capitalists and journalists.
David Cowan is a partner at Bessemer Venture Partners and writes a blog called Who Has Time For This. He’s on this list partially because he incubated the hottest and most anticipated company on the web right now, Flock.
This guy picks winners. Of 43 early stage investments, 19 have gone public and 16 have been acquired. It could be because of his education – he has the killer combination of a math/CS degree and a MBA from Harvard.
Tim Draper invested in Skype. Done.
He also sits on the board of SocialText, and his fund was in Baidu.
Tim will go anywhere in the world for the right deal. Most VC’s with 1/10th his net worth won’t leave silicon valley for a board meeting.
David best asset is that he knows everybody. He’s the kind of guy you want to drink beers with while watching a football game. If you are his friend, he’ll happily introduce you to anyone, and often puts two people together just because he thinks they should know each other.
He’s invested in companies that are defining the web today: SixApart and Technorati among them. And even if he doesn’t invest, he’ll do more than most VCs who have invested to help you. Here’s just one example – take a look at the things he says about Pandora, which isn’t a portfolio company.
David has told me on numerous occasions that “the web is an ecosystem” and that he wants to play his part in making it healthy. He certainly does.
Josh Kopelman, through FirstRoundCapital, is quietly filtering through just about every young web 2.0 company, and investing in many of them.
Josh has a Wharton MBA and was the founder of Half.com, which was sold to ebay in 1998. His investments include Feedster, LinkedIn, Del.icio.us and, reportedly, Browster (and others).
Josh understand web 2.0 better than most entrepreneurs. His experience as an entrepreneur and growing huge businesses out of whole cloth is an incredible asset.
Fred Wilson is a founding partner of Union Square Ventures and writes the extremely popular A VC. If you are new to web 2.0, start with his Blogging 1.0 post. Then read the rest of his blog (even the stuff about music).
Fred was the original lead investor in del.icio.us, back when people were still scratching their heads about it. That enough gets him on the list. But Union Square’s other investments, including indeed, could also be major home runs.
It’s clear from his blog and what people say about him that he spends a lot of time working with his portfolio companies. He’s the kind of guy you want on your side when you go into battle.
Jeff Clavier – Jeff is a former VC and still makes the odd angel investment (Feedster, Truveo, and a few others). His new venture allows him to work with pre-funding companies and get them ready for prime time. In the last year, he’s worked with Userplane, Buzznet, UltraDNS, Glenbrook Networks, Loomia and two other undisclosed companies. If you have a hot idea and need advice, funding, introductions and anything else, Jeff may just take you on as a client and do what it takes to help you be successful – but like a VC, he’ll have to be convinced of your potential.
Brad Feld – Brad is a managing director at Mobius Venture Capital and writes a must-read web 2.0 blog called Feld Thoughts. Read his posts on Term Sheets if you are in the process of raising capital. I keep trying to meet him but haven’t yet. Brad’s investments include invested in NewsGator, Feedburner and Technorati.
O’Reilly AlphaTech Ventures – This is the only non-person on here. OATV just closed a $50 million fund to invest in young companies. Given the incredible access Tim O’Reilly has to these companies, OATV could quickly become an important fund in the web 2.0 space.
Pierre Omidyar – Pierre founded ebay and is the Co-founder of Omidyar Network, where he’s invested in a number of interesting companies including EVDB, SocialText and Feedster, plus a few undiscloseds. And it’s always good to have a multi-billionaire on your side.
Peter Rip – Peter is a founding partner of Leapfrog Ventures, a $100 million fund. Peter also writes Early Stage VC, another must-read blog. His investments include ojos, an incredible new photo-metadata service that is going to be extremely disruptive (and useful). Like others in this post, he’s a guy I’d want on my board. He’s gone through many battles as an entrepreneur in his time (he founded his first company in the early 80’s and worked at Infoseek in the late 90’s).
Peter Thiel – Peter, the former CEO of paypal, has invested in LinkedIn, Friendster, LinkedIn and other web 2.0 companies. He’s just created the Founders Fund. Can’t wait to see what investments come out of it.
The Young Guns
There are three additional VCs that are yet to make notable investments. But they are laser focused on the space and are hungry to make investments in web 2.0 companies. You will find them at every event and seem determined to make a name for themselves. I include them here now because Ithere’s a good chance that when I update this list in a year, they’ll be at the top.
Thomas Ball – Tom is a Venture Partner at Austin Ventures, a fund with $3 billion under management. He’s their consumer and web 2.0 guy and seems to be spending a lot of time in Silicon Valley and at web 2.0 events. Prior to joining AV, Tom was an entrepreneur who founded a couple of successful Internet companies. This adds a unique perspective to his investing philosophy in web 2.0. He works actively with a number of AV portfolio companies including Pluck and, I suspect, will be making important investments in web 2.0 in the near future.
Dan Grossman – Dan is a principal at Venrock Associates and has recently started a great blog called A Venture Forth (where he wrote a much bookmarked post on Ajax). Prior to Venrock, Dan was at Garage.com. You’ll also find Dan at most web 2.0 conferences, and he’s made a huge effort to reach out to the community and network.
Jason Pressman – Jason is a principal at Shasta Ventures, a young $200 million fund that has a deep commitment to and expertise in consumer-focused businesses. Jason was at Walmart.com and was part of a small group of executives that ran the place before coming to Shasta – he was VP of Strategy, Operations and Business Development. He has a keen insight into web 2.0 and has served as an advisor to a number of companies in the space. Jason knows how to grow startups to massive scale, and he is always thinking about which new companies he can help to achieve that scale.