Firms Lure Execs to Help Savor Bubblicious Consumer Sector
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TECHNOLOGY EDITION TRACKING INNOVATION AND THE MONEY BEHIND IT » OCTOBER 2006 | VOLUME X | ISSUE 10 In This Issue Firms Lure Execs To Help Savor » Mark Cuban is hardly a maverick investor. Venture Capitalist Profile > p.5 Bubblicious Consumer Sector » Softbank Corp. maintains a U.S. BY CLANCY NOLAN presence through early-stage Softbank Capital. year ago, Jeremy Liew had a high-profile job as general manager of Venture Firm Profile > p.16 Time Warner Inc.’s Netscape division, a post he took in 2002 after stints at InterActiveCorp and CitySearch. But when a friend suggest- » Patent reform legislation might be A good medicine for venture industry. ed last October that he try venture investing, Liew became intrigued. Tech Letter > p.23 He called Eric O’Brien, a friend and general partner at Lightspeed Venture Partners. Three months later Liew joined the firm. “I spend my day with enthusiastic, knowledgeable, passionate entrepre- neurs who want to build something new,” said Liew, now a partner at the Menlo Park, Calif., firm. “It is a lot more visceral than I anticipated.” Also Inside Liew is just one of a slew of newly minted VCs who have left dream jobs at giants such as AOL, eBay Inc., Yahoo Inc. and Microsoft Corp., lured by Fund Monitor:Advent International has shifted away the high risk and potentially killer returns of venture capital investing. from early-stage venture investing > p.4 Former Yahoo executive James Slavet joined Greylock Partners as a part- Sector Watch > p.6-13 ner in April to source deals in search, mobile technology, online marketing and Consumer:Shopping sites still on VCs’ shelves advertising. Jonathan Fram, a former executive of Envivio Inc. and AOL sub- Energy:Early-stage solar deals are pricey sidiary eVoice, recently joined the general partnership of Maveron LLC, the Software:VCs tackle mature companies >continued on p.19 Networking:Video surveillance looks good Wireless: Chasing mobile cos. in India Corporate View: Start-ups build businesses around eBay > p.15 Options Scandal Shows Need For Digital Document Authentication Early Round Jump BY JOHN W. V ERITY European investors put a higher percentage of capital re VCs poised to clean up on the stock-options scandal roiling Silicon into early-stage deals in the second quarter than a Valley? Quite possibly, but not from any monkey business with the year ago. For the latest VentureOne valuation data, A see page 18. options themselves. Instead, the steady parade of chief executives and others caught up in the €500M back-dating scandal has thrown the spotlight onto a fertile yet underinvested 2Q 2006 2Q 2005 429.1 area of technology called content authentication, or information assurance. A 400 362.5 specialized branch of information security, it focuses on methods for estab- 300 277.3 lishing the provenance of electronic documents and records. 226.5 198.4 By using techniques based on public-key cryptography, it’s possible to 200 175.3 time-stamp a computer file – it might contain a legal contract, laboratory 100 96.1 notebook entry, photo, or even a stock-option – in such a way that at any 52.1 time in the future, it can be proved beyond reasonable doubt that a) the file 0 1st Round 2nd Round Later Stage Other actually existed at the time indicated and b) not one single bit of its contents >continued on p.20 Source: Dow Jones VentureOne, Ernst & Young © Copyright 2006 Dow Jones & Company, Inc. All Rights Reserved Venture Capital Analyst | Technology UPFRONT IDG Ventures Takes On India launched its first fund there in 1992, was largely considered a top prospect for well before the investment gold rush. the CEO spot before he left. With New $150M Fund IDG became the first U.S. venture The high turnover at In-Q-Tel has capital firm in Vietnam this summer raised questions about the perform- nternational Data Group Inc. is when it launched a $100 million fund. ance and future of the firm, which I continuing its global venture-capital The firm also has plans in 2007 to was formed to identify and invest in push with the launch of a new India launch funds focused on Korea and companies developing cutting-edge fund, while also taking a deeper look Eastern Europe, largely untested mar- technologies that serve U.S. national at Korea and Eastern Europe. kets for venture capitalists. security interests. The Boston-based technology me- –Scott Austin Darby comes to In-Q-Tel from dia publisher houses a network of ven- Intel, where he was vice president and ture capital affiliates in Boston, San general manager of the middleware Francisco, China and Vietnam, through In-Q-Tel Picks Intel Exec products division. He has led and sold its IDG Ventures arm. Its latest venture Darby As New CEO three technology companies over his is opening its doors in Bangalore, where career, and has a background in cyber it will meet stiff competition from sev- n-Q-Tel, the venture capital arm of security. –Erica R. Davis eral U.S. firms eager to tap India’s vast I the Central Intelligence Agency and potential. other intelligence agencies, named Intel IDG founder and Chairman Pat- Corp. executive Christopher A.R. Dar- Boingo Wireless Enriched rick McGovern said his company dedi- by its chief as the firm looks for stability With $65M Series C cated $150 million to IDG Ventures at the top. India Fund I in July to invest in a vari- Darby, 47 years old, who takes over ith a new $65 million Series C ety of early-stage technology companies. as president and chief executive on Sept. W round, Boingo Wireless Inc. The fund plans to begin investing in 18, is the second executive to take over amassed what it hopes will be a suffi- October. the full-time post this year since long- cient money supply to make it on its To lead the firm, McGovern time In-Q-Tel CEO Gilman Louie left own as an international WiFi service recruited Sudhir Sethi, who recently in January. aggregator. resigned as president of Hyderabad, Darby replaces interim CEO Scott The round, closed in August, was India-based Infotech Enterprises, an Yancey, who’s held the position since led by existing investor Mitsui & Co., engineering services company that is late April when former head Amit with participation from other previous one of the portfolio companies of Wal- Yoran stepped down after only four investors New Enterprise Associates den International. Sethi was previously months, citing travel demands that and Sternhill Partners, and joined by running Walden’s India venture fund in took him away from his three young new investors Mitsui Corporate Devel- Bangalore. children. Yoran joined in January, opment Funds, Mitsui & Co. USA Also joining the firm as a general replacing Louie, the venture group’s Inc., Steelpoint Capital Partners and partner is Manik Arora, who most CEO since its inception in 1999. Red Rock Ventures. recently was a senior associate at In-Q-Tel spokesman Donald Tighe Boingo, which had raised some Wellesley, Mass.-based Battery Ven- said Yancey is planning to stay on at In- $30 million in its prior two rounds, was tures. Two additional partners are Q-Tel, but the title has not yet been launched in 2001 by Sky Dayton, the expected to come aboard in the near determined. founder of publicly traded Internet future. In-Q-Tel’s hiring follows the quick service provider EarthLink Inc. and a With its new fund, IDG is hitting departure earlier this summer of Mark venture partner with Evercore Ven- India at the same time as several well- Frantz, a former venture capitalist with tures, an early Boingo backer. heeled firms, such as Draper Fisher Carlyle Venture Partners and an old Boingo now has 140 agreements Jurvetson, Matrix Partners, New friend of Yoran. Frantz left In-Q-Tel in place with providers of 45,000 WiFi Enterprise Associates and Sequoia after only about three months on the hot spots worldwide. By using Boingo Capital. job to become general partner with software, a user can employ the same The timing is somewhat atypical Redshift Ventures, an investment firm user name and password to access any for IDG, which prides itself on being formerly known as SpaceVest. As man- of the 140 networks at any time, for a an early success story in China – it aging general partner at In-Q-Tel, he monthly subscription rate paid to October 2006 2 Venture Capital Analyst | Technology UPFRONT Boingo of roughly $21.95. based SunRocket’s standard Internet when he or she uploads video. Each Boingo has so far concentrated on phone service costs a flat price of $199 new download creates additional net- providing service to laptop computers, per year to the U.S, Canada and work peers from which the video can but it is gearing up to begin serving Puerto Rico. Using SunRocket’s tech- be accessed, leaving a light load for the WiFi-enabled, dual mode mobile nology, a caller plugs a regular phone Grouper servers. The company also phones able to connect through WiFi into an adapter instead of the wall, enables video on third-party sites, clouds. –John Letzing and the adapter routes the call to the including social networking company Internet. Friendster Inc. SunRocket is pushing for market The acquisition likely supplied SunRocket Muscles Up share, but as a late entrant, it continues tidy returns to Grouper’s venture invest- With $33M Series C to trail the competition. SunRocket has ors. The company raised a total of $5.25 about 150,000 customers, up from million in financing.