Jeff Clavier's Software Only

Welcome Stephanie Palmeri, the gal I meant to dissuade taking a job in venture... and ended up hiring

We’re super excited to announce that Stephanie (“Steph”) Palmeri has joined SoftTech VC as Senior Associate, a brand new position in our firm which has grown 400% since January 1^st. Steph is awesome: smart, workhorse, funny, New-Yorker, swear-proof, determined, Columbia MBA – in no particular order. And we can truly say that serendipity is responsible for that lucky find for us.

If you follow me on Twitter/Google+, you might recall a post I wrote a couple of months ago (which generated a lot of great comments):

A very smart MBA (who just graduated) wrote me asking if there was a job opportunity at SoftTech VC. She really wants a job in venture apparently, which I can respect, but I really think that venture (aka "the dark side") is a gig you do after accumulating operating experience. Here is what I wrote her:

"In any case, I don't think that we are going to be able to help: we are building the firm with Partner level investment professionals who have 12+ years of operating experience. We may at some point bring in a principal as well, but once again, we'd look at bringing in someone who has had at least 8 years of relevant operating experience. Why? Because you can't really advise or provide perspective to a young CEO/founding team if you have not been exposed to "real life" yourself.

So what am I saying? That you should take that offer from <redacted> – they seem to see a rockstar in the making in you, and it is a great, promising company. And ask <redacted> to give you some exposure to the different facets of the business, and try to take on different challenges over the next few years.

If you really want to go for a venture role now, only sign up for a top firm. And after two years, cut yourself loose and join the most exciting portfolio company of theirs (or others) you have seen. You can't really have a career in venture, you have to move in and out.

Sorry if it is not what you wanted to hear, but I'd hate you end up in venture too early – when it is not the most fun and rewarding."

Yes, that gal I was referring to was Steph. Read on.

I figured in the first five minutes of our discussion that I was wasting my time (and hers) trying to dissuade her from joining a VC firm. Despite having opportunities in the New York scene, she had packed her stuff and was crashing with friends in the Valley determined to find a VC gig here. With almost 10 years in operating experience in Marketing and consulting roles (something Steph almost neglected to “sell” in her email intro to me), and a real passion for the investment side, I thought that she’d have a very decent shot despite the “local” competition.

Mind you, the venture world desperately needs more women – especially for those of us investing in Consumer Internet where a majority of the traffic and revenues is generated by… yes, women and investment decisions are mostly made by a bunch of dudes. And it had always been my intention to fix that flaw upon finding the right person/fit for us.

We had originally built SoftTech as a “Partner-only” firm, where each investment professional would have seen “enough” of the entrepreneur/executive side that they could use their better judgment and personal screw-ups to support portfolio company challenges and opportunities. There are limitations to that model, ones that Charles and I were definitely feeling (with 200 to 300 opportunities hitting our inbox a month). When a model shows its limits, you change it – and that’s we did by offering Steph to join us for an “experiment” (the VC equivalent of basic training).

We told Steph that she would have about 10 weeks to demonstrate to us that we needed someone to come in and help us working on our inbound dealflow, getting involved in due diligence checks and models, doing more proactive research on areas of potential interest, etc. And I think that it is fair to say that we kept Steph really busy – asking her to cover a wide array of things so she could get an acute feel of what her job would be, and we could see how she was doing. A reciprocal "try before you buy" of sort that she accepted without blinking.

Long story short: after 5 weeks, a ton of work and a number of very positive reference checks, Charles and I caucused one last time, and agreed to terminate the “experiment” to offer Steph a full time role of Senior Associate. And obviously we are super stoked that she instantly accepted!

Steph will work with us on opportunity reviews, due diligence, market analysis and dealflow management - to start with. Not bad for someone who I wanted to dissuade joining the venture world, uh?

You can follow Steph on Twitter at @stephpalmeri or on 280 in her red Mini. And join Charles, Ashley and I in welcoming her to the dark side!

The genesis of the "Super Angel" moniker?

Yesterday I saw this question on Quora: When did the term Super Angel first come into use? and couldn't help but adding my own 2 cents.

I believe that the term "Super Angel" was used for the first time in the Startup Visa act. It defines the Super Angel as "an angel investor that has a track record of regularly participating in seed round investments" for the purpose of the startup visa proposal. So the term was coined sometime in 2009 by someone involved in preparing the act - Brad Feld, Dave McClure, Manu Kumar, etc.The term was then extracted out of this context by the media to refer to us, the 15 or so firms investing in the early stage space. It is a total misnomer since we're all all VCs: we manage OPM (Other People's Money), and as such micro-vc or seed fund is really what defines us. But the "Super Angel" term is sticky - to say the least.

As an aside, the Quora team should make it easy for blogger types to syndicate their answer on their own site. Yet another free distribution channel.

Photo Credit: Rachel Titiriga (Flickr)

Crunchies 2010: Please help our Founders!

It is that time of the year: the Crunchies - Vintage 2010 - are upon us. Less than 48 hours remain for all companies and individuals to get the necessary votes to win their respective categories. A number of our founders are competing, we'd appreciate any help/vote you can send their way. 

Congratulations for their nominations:

• Best Internet Application: Chartbeat
• Best Technology Achievement: Blekko
• Best Touch Interface: Fotopedia
• Best Founder of the Year: Eventbrite's Julia and Kevin Hartz

Thank you, and see you on Friday! Very excited to see that ELEW is going to play.

PS: And yes, we're thrilled of the nomination to "Best Angel" again this year!

Welcoming Charles Hudson and Ashley Cravens to SoftTech VC

Almost seven years ago, in May 2004, I started SoftTech VC with a goal to get involved in a number of startups that were defining the "New" consumer internet space. Hustling my way into the first few deals I closed as an angel, I was lucky to meet amazing investors like Josh Kopelman, Brad Feld, David Hornik, Reid Hoffman and Jon Callaghan who generously shared their experience, wisdom and started working with me. To this day they have remained fantastic friends and relentless supporters, and I want to acknowledge their contribution to SoftTech VC over the years.

After three and a half years of angel investing, building Fund I's portfolio, I had the opportunity to raise my first "real" fund, SoftTech VC II, with a view to figure out the institutional incarnation of my angel investment strategy. Low startup costs, including development, marketing and distribution, had changed the nature of the investing business: the cost of failure had gotten so low that seed capital was becoming a quasi-commodity. All Benjamins being equal the differentiation amongst investors is the quality of their support, the actionability of their network, and the efficiency by which they can deploy their resources on behalf of their companies. For the duration of Fund II, I had elected to run SoftTech lean and mean, with just myself in the firm and an awesome outsourced back-office team (big shout out to Dom Turiano and Joe Pruscino at VMS). Why? Because I wanted to be able to develop, evolve and even - eeeeww - pivot the model by which I was operating in quasi realtime to respond to market and portfolio demands.

As I am turning the corner of Fund II, I am also confident that the model established over the past 80+ investments can scale and it is now time to beef up SoftTech VC resources by bringing top talent on board, allowing us to better serve our portfolio companies, present and future.

First, I am very excited to welcome Charles Hudson as a Venture Partner. I have known Charles for almost 9 years, from his days at In-Q-Tel, and we have kept in touch as he went through Google, Gaia Online, Serious Business and built from the ground up the awesome Social Gaming Summit series of conferences that he successfully sold last year. As I started thinking about bringing people on board to scale the SoftTech partnership, Charles was one of my very first calls. The big question when you get the call from the Dark Side is whether you are going to like the very particular job VCs have, and whether now is the right time to make that transition.

Charles has spent enough time around the VC world that he knows what to expect. We had very open discussion about the fact that he did feel he had one more startup "in him", and he went on to co-found Bionic Panda, a very cool mobile gaming company.  My good friends, and numerous times co-investors, at True Ventures have established an interesting model allowing Tony Conrad and Toni Schneider to be both Partners in the firm, and CEOs of their respective companies. As I have worked closely with these two fine gentlemen on some of our mutual companies, I have seen first hand that the model works. That inspired me to offer the same opportunity to Charles: join me as a Venture Partner, who will make investments on our behalf with an initial focus on the gaming and mobile sectors, at the same time he develops his own startup. Not so many individuals would be able jump into two very demanding gigs at the same time, but Charles is definitely one of them - as anyone who has worked closely with him in the past will attest. Charles is also recognized as a top business development talent in the Valley, and he will be supporting our portfolio companies in that critical function. So from now on, I'll proudly refer to "my Partner Charles Hudson".

Second, no VC organization would succeed without amazing executive admins who work in the background to make sure that everything runs smoothly. I have finally found the one for me - thanks to Carly Spoljaric, Rob Hayes' very own EA at First Round Capital. I was thrilled to see Ashley Cravens join SoftTech last Monday, as my Executive Assistant. A warm welcome to Ashley who just relocated from Portland, Oregon to the Bay Area.

For the very first time, it makes sense that our Bios page is titled "About Us".

My personal "Panel Pile Up" Etiquette

My friend Fred Wilson wrote a post this morning about the looong queues of people speakers face after panels or talks we give at conferences: The Panel Pile-Up. This post is actually an edit of the comment I left on Fred's blog.

I am speaking at one or two events a week, and I am seeing that pile-up all the time. It takes me anywhere from 10 to 40 mins to get off stage or "free myself up". Once it took me over an hour to leave the room - at a TiE Conference a couple of years ago.

I consider it part of the job to meet people in the hallway, and so I try to be as efficient but gracious as possible. A sixty second pitch, a couple of short Q&As followed by "Can we continue the discussion by email?" are fine since I will typically be able to indicate whether I am interested in following up, or not.

It is also completely fine to introduce yourself and just mention that you will forward a plan through a mutual connection. Putting a name on a face and shaking hands is always nice.

I always carry business cards, and happily give them away when asked. Why? Because it is the most efficient way of moving to the next person! Otherwise I need to spell my email address j-e-f-f (like Franck)<dot>s-o-f-t-t (yes, two t's) e-c-h-v-c (yes, vc like venture capital)<dot>com. If you compound the ambient noise, and the French accent, it would take me way more time than handing over a business card.

Very often, people will ask if I can meet them to give them feedback ("someone" said "If you want money, ask for advice"). And despite really enjoying doing it, but I am really short on time. So getting such a meeting organized through a trusted connection, like the funding pitch meeting, is often mandatory.

What's not OK is "hogging the line", and not understanding that 2 minutes is really the maximum you have keep a conversation going, out of courtesy for the other people going. Or trying to convince me to invest - right there and then, whereas the only reasonable expectation is to be invited into a meeting to pitch your idea. Other favorites (not) are asking me "if I invest in consumer internet", "if I invest at the early stage", or "what I invest in". If I have been on stage, I have most likely introduced myself and explained all that. 

As Jason Calacanis commented on the post, no entrepreneur should randomly pitch an investor without knowing the space, the stage and the context in which he/she invests in. Jeff Bussgang also made a very good point: we don't have the same level of expectations with students - when I hang out at University conferences, and after class when I speak/attend courses, I am perfectly happy to answer even the most basic questions, that's what we are here for.

Dan Primack asked a question in today's PE Hub Wire: out of the thousands of people who have pitched us at conferences after a talk, how many have we invested in. You might have guessed the answer: zero. It is as rare as investing in a business plan received via a "cold email" on our business plan email address. 

But I do believe in the value of serendipity: you never know where your next deal is going to come from. I can say that I met the founders of Userplane (Mike Jones, we sold the company to AOL and he is now CEO of MySpace) and Buzznet (now BuzzMedia, a 50M+ u/v's network of web sites in the entertainment space) at a conference speakers dinner 6 years ago. So here you go: it's worth it ;).

A few of my friends wrote Dan about their experience: three of them met a company they ended up investing in after a panel.

Robert Scoble is first in line to get an iPad - again

Almost three years ago, I was driving up University Avenue and stopped to grab a coffee at the Peet's Coffee across the Palo Alto store. It was 9AM and Robert Scoble and his son Patrick had just arrived to wait in line for their iPhones (as memorized by this post). They waited 33 hours.

Fast forward to today, 1pm-ish: I was walking over to grab lunch at Pluto's, also across from the Apple Store. And guess who was there, waiting first in line for his iPad this time ;). Ton of hype around this launch, sure! Some rain too, which sucks for the few people who are now waiting for the opening of the store tomorrow at 9am, when they start selling the much expected device.

Me? I am super excited, and will be at the Store around 11am tomorrow to grab the iPad I have reserved the day it came on pre-sale. And I am certain that it will become the 3rd device, between my phone(s) and my laptops(s), that I will be carrying around the house and some of my trips.

I am also extremely bullish for the iPad as a gaming platform, and two games developed by cos of mine have just made TechCrunch's list of best iPad applications: Tap Tap Radiation and Red Fish (respectively from Tapulous and FreshPlanet, which we just decloaked around this launch).

Tags: ipad, robertscoble

Wishing you Happy Holidays, and asking for your help in fulfilling my daughter's Christmas wish: Fund a water well

I want to take the opportunity of this second blog post of the year (!) to wish you and your families Happy Holidays and a Happy, Healthy and Wonderful New Year.

For a recession year, 2009 was not all that bad: SoftTech VC II closed 15+ new investments, a number of our companies raised additional financing from great VC firms (Eventbrite, Curse, Outright, Blekko,...) and we even enjoyed a few nice exits (Ohloh, Mint, Mixer Labs,...). I am also honored to be a finalist for Best Angel investor at the Crunchies, and I am really excited about the prospects of the companies I invest in for 2010. But that's not what I want to focus this post on.

I want to tell you a mundane, yet very important story about the power of social media, and how our kids can actually help make the world a better place. A few months ago, my wife Bernadette saw a tweet from a Stanford professor mentioning how powerful this video from Charity Water was. She decided to show it to our kids, and our daughter Jade - who had her 9th birthday coming up a couple of months later - decided instantly to forego her birthday presents and ask the friends she would invite to her birthday party to contribute to her Charity Water campaign.

What resonated with Jade most was to fill up a glass of water, put some mud in it, and realize that kids in Africa have to drink that muddy water - instead of the clean water that she is taking for granted. The initial goal of the campaign was to raise $200 - just from the friends who joined her birthday party. And that initial goal was fulfilled. We had said that Bernadette and I would match what Jade would raise by herself, and as of today, we have lined up $398 - which was great. But it was not enough, we felt we needed to do more.

Building a well costs $5,000, and that well can serve the needs of a local community in Africa, or other parts of the world that don't have the luxury of clean water. A donation of $20 can also serve the needs of a kid for 20 years, so do the maths: $5,000 will help 250 kids with their needs for 20 years.

Jade's wish for this Christmas is that we help fund a well. Bernadette and I will match the first $2,500 contributing to that goal. So if you - like us - find that this is an important cause to support, please help spreading the word or consider donating to Jade's wish.

Happy Holidays, and thank you.

Tags: charitywater

Mint+Intuit: It's done - for $170M

I have made no mystery over the years that out of the 65 companies I have invested in over the past 5 years, Mint and its CEO Aaron Patzer, was one of the most exciting. It definitely met the “3-asses” rule: a young, brilliant, kick-ass CEO (Aaron), a big-ass, phenomenal, market (personal finance) and a smart-ass product (mint.com).

I met Aaron in July 2006, thanks to the introduction of Sanford Barr (Aaron owes you a big one man ;), and I was impressed by his determination and ambitions, and promptly decided to invest in the Seed round eventually led by my good friends of First Round Capital. After building its product for over a year, Mint launched at TechCrunch40 in Sept. 2007 (and won the $50,000 prize). And from thereon, it developed a fantastic service, adding 1.4M users, and this morning, announced that Intuit had agreed to acquire the company for $170M in cash.

Aaron was just on stage at the TechCrunch50 conference, two years later, to confirm the “rumor”. Aaron will run Quicken Online and Quicken Desktop over at Intuit. He also wrote a great guest post on TechCrunch, relating to some of the fundamentals of building Mint.

Huge congratulations (and thanks!) to Aaron, the entire Mint team and all my fellow co-investors for this fantastic success. Exiting at $170M in this environment is no small feat.

Rob Hayes has a great post on the history of Mint, which he witnessed, and contributed to, as a board member since the Seed round. And yes, Mintuit was an easy one. The New York Times also wrote about the acquisition here and here. Josh Kopelman points out that Aaron (Patzer) always preaches fiscal discipline, he's now a member of the First Round Capital “blank check club” -- and should he ever start another company, he can come to us to claim it ;-), and I'll offer the same!

Tags: intuit, mint

One of the 25 Most Influential People on the Web. Moi?

Well, I would certainly not have claimed it, but BusinessWeek has when putting together this list of usual, and not so usual, suspects that includes yours truly.

You see, what always troubles me having investors being “celebrated” is that our job is to help and support entrepreneurs, and make sure that the attention is focused on them, not us. Like I said when the list of 13 Web 2.0 Kingmakers was published, I feel that I have been extremely lucky to work with a number of really smart entrepreneurs, some (5) who sold their companies in early yet very profitable exits, a few (4) who failed, and a lot (close to 40) who are still working very hard at it at different stages of financing. But four years into investing in consumer Internet, they - collectively - and I still have everything to prove, especially in these most challenging times.

So thanks to BusinessWeek for the attention, and let's hope that in a few years I will have proven them right. It is obviously very nice to share the investor spot with peeps like Peter Thiel and Paul Graham. And many congratulations to my friends Loic "The Communicator", Ev "The Blogger", Matt "The Publisher", Joi "The Adviser", Kevin "The Poster Boy" and Gabe "The Traffic Driver" for this well deserved recognition.

While I am at it, many people have complained to me, over and again, that I had abandoned my blog. As I explained in this post a few months ago, I sort of have - in an extended sabbatical kind of way - but you can always find my rumblings of all kinds at @jeff on Twitter.

Tags: evanwilliams, gaberivera, joiito, kevinrose, loiclemeur, mattmullenweg, jeffclavier

Twitter: Where Nobody Knows Your Name - Yet ?

Props to Kara Swisher for prompting me to open Ecto and work on a blog post, something I have not done in a long long time (almost 5 months since this announcement of my Seesmic investment). I won't even apologize to my 122K RSS subscribers (what ?) because I am not feeling apologetic at all. I have moved on from blogging - feeling the obligation of developing 500 word pieces that took sometimes a couple of hours to assemble - to bits of 140 characters, and rarely videos, I post every now and then and I suspect that a lot of my “audience” - entrepreneurs, VCs, established Internet companies and other constituents have pretty much followed me to twitter. Disclosure: I did not invest in Twitter but a lot of my friends have.

Kara makes the point in her post that Twitter is not very well known outside of Silicon Valley - yet and asks when we'll see a mainstream adoption. This is true and I suspect very similar to Flickr's initial ramp 4 years ago. In comparison Facebook was broadly known and used in her sample audience, but I would argue that anyone actively using Facebook status messages might be counted in the Twitter “use case”: easy to publish micro bits of information, including pointers/notifications to other pieces media.
This micro-chunking of the information - the arbitrary limitation to a few tens or hundreds of characters in a world of Gigabit networks - drops the time commitment barrier to a couple of minutes tops. Most people can't commit large chunks of time to read/write/comment on blogs, but everyone has a couple minutes to spare a few times a day... not too far away from a phone or a computer.
Offering broad access on the web, on the phone, one message at a time or through applications, in real time (even if you are not pushing it like Scoble does) or in batch mode, allows time (and CPA ?) challenged users to get a quick return on the attention investment they choose to make at any point during the day.

Would we spend more time face to face in order to catch up on our day to day ? No, lack of time. Is it sad that we proxy a conversation with a 140-character max status update? No, because a tweet might lead to a conversation that would not have happened in a first place. You can't speak to me, I won't read you, but do notify me - sort of thing. Do I need to ask myself if I am a writer or a journalist before twittering ? NO. And that's why we'll see eventually millions of users of these simple communication tools starting to publish bits about their lives, even though they will never have a blog or use an RSS reader.

Note that I am making the case for a broad adoption of micro-blogging, or whatever that “super easy posting of a personal status update” is called. As to whether Twitter, Facebook or another yet-to-come service will be the “winner” in the space, who knows. But the broader audience, and the broader need, will be there. As to how you turn this into a business, and make money? There are enough smart people in and around these services, and enough usage, that something will eventually be figured out IMHO.

And if you marry that with the iPhone platform, it gets even more interesting. But that's another story... in 5 months or so.

Photo Credit: PinarOzger. Don't ask me why I felt that this picture of Tim O'Reilly bowing to Dave McClure was relevant to the story, but it did ;).

At, On and In Seesmic

Even though it is still in closed alpha, Seesmic has started generating a lot of buzz in Silicon Valley, in France and in the Social Media ecosystem. I remember clearly when its founder, my dear friend Loic Le Meur, told me months ago about the idea of a video community that would be able to interact and exchange using short form videos - sort of a “Twitter for Video”. I don't recall if my initial reaction was “Doh”, “Yukh” or “Pfffh”. Then, mid October, I had access to the very cut of the product. It was still pretty raw, or at least medium rare, but definitely showed a lot of potential for creating conversations through short form videos on Seesmic itself, but also the on other services that videos can be posted or linked on. I also saw the initial frenzy - that we are used to - around the release of the first set of keys to access the application, and the increasing number of videos created by the first few hundreds of test users. For a group that size, they create a *lot* of video content, and we can see conversations happening around these videos on twitter, youtube or individual blogs.

So yesterday I was at Seesmic, visiting the office - great space I must say, just a puppy promenade away from Dogster's headquarter - where the previously announced recording studio is being built. This gave me the opportunity to be on Seesmic, in show #40 which also featured the inaugural Seesmic logo, aka “The Racoon”. And finally, on that video, I briefly announced that SoftTech VC was investing in Seesmic, joining a list of prestigious investors.

So thank you Loic for giving me the opportunity of being at, on and in Seesmic! And yes, from now on, you will be referred to as “Number 8”, since Seesmic is the 8th investment of the fund. Those paying attention will point out that I had announced 4 investments to date - correctly so. It is just that investments #5, #6 and #7 have not been disclosed yet. They will at the right time in the near future.

I have embedded show #40 in this post, but if you want to suffer watch the full segment we taped, you will find it here.

Finally, I announced on the show that I had a few Seesmic invites, feel free to leave comments, link to this post or message me on twitter (@jeffclavier), and I will send you an invite code.

Tags: seesmic

Conferences FYI: Graphing Social Patterns, the Business of APIs, Defrag and LeWeb3

I have explained and written many times over about conferences I attend, speak at or help organize. They represent a unique opportunity to catch up with a vast number of contacts or companies in our industry, and meet (and get pitched by) startups by the dozen. At the Getting Funded panel of TechCrunch40, I even mentioned that “getting mobbed at conferences was welcome” (as noted by John Paczkowski in his column :-)) and boy was I well served - it took me over an hour to leave the room after talking to about 20+ startup entrepreneurs). So I like attending conferences, and one of my favorite activity - besides being on stage - is “lobbyconing”.

The next couple of months are going to be very busy on the conference circuit. We'll obviously have the main event of the Web 2.0 industry, Web 2.0 Summit, in a couple of weeks - no need to talk about that one. I want to give a shout to 4 events that are put together by friends of mine, and look very interesting.

First, starting in a couple of days is Graphing Social Patterns : The Business & Technology of Facebook, organized by my good friend Dave Mc Clure. It is a conference for developers and marketers on how to build and distribute apps for the Facebook Platform, and how to reach online communities using social networking platforms and applications. The conference will be held in San Jose, CA from October 7th-9th. Main conference sessions are Monday 10/8 and Tuesday 10/9, with a bunch of cool workshops and a Hackathon on Sunday 10/7. Readers of Software Only can register with this 30% off discount code, but act quick - the conference is about to sell out.

Then is the Business of APIs conference, co-produced by my friends of DealMaker Media and Mashery's CEO Oren Michels (Disc. I was a founding investor of Mashery). As we know APIs are a key foundation of the Web 2.0 ecosystem, but too often (sigh) is the business implications of making APIs available overlooked. The objective of the event is to cover that very topic. It will take place in the afternoon of Monday 10/15, at the San Francisco City Club, and you can request an invitation here.

Early November I will head to Denver for Defrag, a very interesting event focused solely on the internet-based tools that transform loads of information into layers of knowledge, and accelerate the “aha” moment. Defrag is about the space that lives in between knowledge management, “social” networking, collaboration and business intelligence. You can enter the code defrag3 to get $300 off the registration price.

Finally, on December 11&12th, we'll have the fourth edition of LeWeb3, which I am really looking forward to. This year's program is in the good hands of Cathy Brooks, producer extraordinaire. I'll have a discount code for my readers sometime next week.

Announcing SoftTech VC’s $12M seed fund – the Return to the Dark Side

After 3 years of angel investing in 20+ Consumer Internet startups (and profitably selling 5 of them), I am very excited, and humbled, to announce the launch of my very own VC fund, SoftTech VC II, L.P. Some of you may wonder what is actually the difference between what I have been doing until now – after all I am still referred to as a VC by many – and this new $12M fund.

One major difference: I have taken the step (back to the Dark Side ☺) and have raised outside capital, from a mix of fantastic institutional and private investors. Angels invest their own money, VCs invest capital they have raised from others - as well as their own since it is market practice that Fund Managers also contribute to the fund’s capital. In most cases, it is extremely difficult to raise the first fund of a new firm. Despite great individual track records, it might take a year or two of effort to assemble a syndicate of Limited Partners (this is how people investing in VC funds are referred to) willing to back a new team.

When I left my previous fund (Reuters Venture Capital), I wanted none of that: my passion was working with early stage entrepreneurs, supporting them with time, cash and connections. And since I had zero track record in the consumer internet space, thinking that I could raise outside capital in 2004 would have been a total fantasy. That’s why, like so many entrepreneurs, I decided to bootstrap my own startup – using some of the family’s savings and generating cashflows from a few consulting gigs. It just so happens that the “market” I had decided to enter was early stage investing… in other startups. Last June, serendipity helped me decide, and eventually secure, the next logical step for SoftTech VC. As many friends in the angel and VC community were asking me whether I was thinking of joining an existing firm, or raise my own fund at some point, a few people hinted that they would be really interested in investing in a fund if I was to start one.

A few more discussions and one PowerPoint, later the core foundation of my new fund was there:

• invest in 30 to 40 seed stage startups
• average “bite size” of $250K, ranging from $100K to $500K
• able to lead, co-lead or follow other firms or angel syndicates
• focusing on consumer Internet, but with a great flexibility to enter new sectors opportunistically • open to a few non Silicon Valley deals
• capital efficiency, great teams, differentiated ideas and flexibility on “how big it can become” will be common characteristics shared by the companies we invest in
• working hand in hand with the best firms in Silicon Valley, and the usual suspects in the acquisition gang, to build a successful outcome for everyone involved
• I would be the sole Fund Manager of the fund, with the support of a fantastic advisory board: my friends Jon Miller, Josh Kopelman and Reid Hoffman

The actual size of the fund was the subject of an interesting discussions, tossing around different numbers that all would have made sense: $5M, $10M, $20M,… A number of factors led us (my investors and myself) to decide that $12M was the right amount, and a significant portion of the fund was subscribed in just a few days, with final allocations having been made a short time thereafter. You have two ways to look at how long it took to raise the fund: 3 ½ years of hard work since I started investing, or a few weeks. All this would not have happened without the support and wisdom of the great investors who decided to follow me in this adventure: Jon Miller, Reid Hoffman, Josh Kopelman, Geoff Ralston, Jim Bankoff, Mark Fletcher, MR Rangaswami, Loic Le Meur, Brad Feld, Frank Caufield and his firm Darwin Ventures, Tim Chang and the whole Norwest Venture Partners team. And no, I am not naming everyone – some investors want to remain “stealth” and I obviously will respect it. But thanks to ALL of you.

I am used to always direct any bit of attention I get from the media to the real heroes: the entrepreneurs I have the privilege to work with, building great companies, capturing markets and having fun at the same time. I am therefore super psyched to introduce the first four investments of SoftTech VC II. Yes, four. Been busy this summer, between forming the fund, selling two companies (Yay Kaboodle and Maya’s Mom!), and getting these four to the finish lines.

I will write a post about the fund’s investment areas of interest later this week, and want to share a quick background to these new investments:

• SocialMedia.com was co-founded by my good friend Seth Goldstein, and has been building an infrastructure and an ad network targeted at social network application developers. The company will help these developers manage, market and monetize their applications.  After just a few weeks, last Friday’s revenue on Facebook alone, was over $10K - most of which was distributed to independent developers.
• Active Athlete Media’s focus is active consumers who participate in sports, and the advertisers desiring to reach this passionate audience engaged in the sports they love, on thousands of mid to long tail websites. To date, I had been reluctant to jump into a sport-centric community (passion centric communities will still have a strong representation in the new portfolio). However a monetization solution like Active Athlete’s, which has been steadily growing and generating revenues, became very attractive in order to set foot in the category.
• Satisfaction Unlimited announced its funding mentioning me as an angel investor just last week, but I am pleased to point out that it is actually SoftTech VC II that made this investment. I have known the co-founders of the company, Thor and Lane, for a long time, and saw their concept of a People-Powered Customer Service being refined and improved over the course of several meetings through the summer, and could not pass on it.
• Grouply is one of these “The World Needs” companies where one day I decide that a product or service needs a fresh start. There are hundreds of millions of users of message boards, email lists, forums and online groups products like Google Groups and Yahoo Groups, and they have not evolved for a long long time. Grouply will help solve that by enabling users to easily adopt a richer and more powerful experience for their existing online groups.

One of the key factors that have influenced my decision to get on this journey is the sheer number and quality of many of the companies that I have had a chance to be introduced to. I feel extremely lucky to have the best job in the world, and to be given the opportunity to take my passion to the next level.

Turning to page 40

It took me a few minutes to start writing something after putting in this title “Turning to page 40”. I re-read the many emails, Facebook private and wall messages, skype IMs, SMSs, twitter messages and greeting e-cards I received over the past 24 hours. I am grateful for all of these, a big Thank You to you all. One of my journalist friends nailed it: “Just wanted to chime in and wish you a great year ... and decade, I suppose!”. A great decade is what I am wishing myself today, I guess for the first time. I only have a vague souvenir of my turning 20, I remember the 30 transition because of the great wines (and the headaches) we had, but for some reason I find that turning 40 is a bigger deal. Sort of not being old yet, but not being young any more. My good friend Reid Hoffman took the same turn a few weeks ago, and I'll have to confer with him on his thoughts on the matter (happy belated birthday to you Reid :-).

This new decade coincides with two other important milestones. One is personal: in 2 weeks, my beloved wife Bernadette and I will have been married for 15 years, and I have to send a big shout and much love to that beautiful, wonderful and wicked smart woman for having put up with me for such a long time. And for having supported my sort of unpredictable career moves - from being a CTO in France to becoming a VC in Silicon Valley 7 years ago, and then leaving the comforts of the “dark side” to launch SoftTech VC, kinda my own startup.

That is my second milestone: about 3 years ago (and a few months), I decided to start this firm and invest my time and our family's money into early stage startups, more precisely consumer internet startups located in Silicon Valley. Web 2.0 did not exist per se then, nor was it as obvious as today that there was a tremendous opportunity to help launch capital efficient consumer services that would leverage a more mature Internet, one that was widely available, and where monetization opportunities were real (at least in my mind). Three years, 25 deals and 5 successful M&A exits later (Truveo/AOL, Userplane/AOL, MyBlogLog/Yahoo, Kaboodle/Hearst, Maya's Mom/J&J's BabyCenter), I am still very bullish about the myriad of early stage investment opportunities that are in front of us. Yes, there are pockets of over-invested areas in the consumer space, and yes, some valuations got me to wonder wtf some investors were thinking (*), but that does not mean that we are entering Bubble 2.0. That's what I am betting in getting ready to make my next batch of 25 early stage investments in the next few years. And I hope that I will have the same sheer luck of meeting exceptional, smart and passionate entrepreneurs - some of which I decided to join and support, and others I wished best of luck to.

(*) I remember distinctly hearing these same discussions when KP & Sequoia invested in Google, and when Accel Partners invested in Facebook. So these valuations do make sense sometimes...

So thanks again to all for your kind wishes, and cheers to the new decade :-). I am off to a meeting with my lawyers now, writing some of the first paragraphs of... page 40.

Photo Credit: Jeremiah Owyang (congrats on the new gig Dude :-).

Tags: turning40

The iPhone mania: Robert Scoble and Patrick first in line

  Robert and Patrick first in front of the Apple store in Palo Alto 
  Originally uploaded by jeffclavier

Robert has said that he was going to do it: well here he is with Patrick camping in front of the Apple store in Palo Alto since this morning 9:30am. For the short period of time I was there, a crew from CNBC and a   reporter from the Red Herring showed up to interview them.

It is going to be a zoo over there tonight, but it should be fun. I am not planning to stay overnight, but I might do my meetings tomorrow afternoon in the queue if there aren't gazillions of people waiting.

Apple has released information about tomorrow's "stampede": they will close the stores for 4 hours before the 6pm opening, and will sell a maximum of 2 iPhones per person.

I really need to find an original way of talking about the conferences I attend

Howdy! First, to all of you really anxious to follow me around (but don't feel obliged, really) twitter (here) is where my “creativity” expresses itself these days. In short bursts of 140 characters max - which I found amazingly annoying but now really appreciate.

May has been crazy busy at work, lots of good developments in the portfolio, and lots of thoughts put in the scaling of my own business. And of course a bunch of conferences. And June is going to look pretty much the same.

First, I am writing this from SFO on my way to Amsterdam, where the Next Web conference is taking place this Friday. A great line-up of keynote speakers, and the super nice organizers, has led me to accept to fly to Europe for a couple of days (ouch). I'll write my preso in the plane on “Investing Around The Globe and the New Connectedness”.

Then, I will speak at SuperNova 2007, the conference put together by Kevin Werbach that takes place on June 20/22 in San Francisco. I will be on the investors panel and might disclose a new investment I have made there and then.

Finally, I will attend another DealMaker Media Under the Radar event, this one on Entertainment and Media (Disclosure: I suggested a few names of companies in the category and was asked to sit on the selection committee of the event). It will take place on June 28th at the Microsoft Campus in Mountain View.

More when I get to Amsterdam, the plane has pulled back from the gate and the flight attendant is not happy that I tell her that I have to publish this. See you on the other side :-).

Another week, another bunch of conferences and events

You might think that I am spending all my time speaking at, or attending, conferences and there are some weeks where that feels very true. This week is one of those, with a few back to back events that are worth mentioning.

Monday 5/7 is the day of Startup Camp II, at the Westin San Francisco Market Street. I will hang out there for the day, and will probably lead/participate to a startup financing session, but there will be a lot of very interesting discussions.
Update: I just posted the slides that I used in the session this morning. Thanks to all involved for your participation and your many questions.
Update II: a few people complained that they could not really make sense of the slides (like the empty slides on Growth and Exit). This might indeed be the case since their sole purpose is to synthesize the points I covered in my talk.

Tuesday 5/8 sees the start of Software 2007 at the Santa Clara Convention Center, Santa Clara CA), a conference focused on the enterprise software market that will last for 2 days. As already mentioned, Ismael Ghalimi and I will lead the Enterprise 2.0 theme, made up of four panels.

Finally, I want to give a big shout to David Beach, the new co-chair of the SDForum Search SIG. He has put together a very interesting event for Tuesday Night over at Google on People Search. Very interesting topic that has seen a bunch of activity over the past couple of years, and it is just the beginning. Companies participating are Wink, ZoomInfo and Spock - Mike Arrington will be mc'ing. You can still attend that event by registering on site just before the session.

I will also swing by Stirr's Founder Mixer 2.5 on Wednesday. Another shout to Sanford Barr for starting this event that has become a must attend in the Bay Area for startup entrepreneurs, established companies and financiers.

Do come and chat if you are attending any of these events.

Tags: startupcamp2, searchsig, software2007

Introducing Kongregate - my first investment in the gaming space

My most recent investment, Kongregate, announced its beta launch last night alongside the closing of a $1M seed financing. I am delighted to be part of a strong syndicate of angel investors, led by my good friend Reid Hoffman, backing gaming veteran Jim Greer and his team. Even though I don’t like these types of analogy, you could argue that Kongregate is a YouTube for casual games developed in Flash (today).

Developers will be able to upload their work on the site – maintaining all IP, rights, etc. – and will get exposed to the community who will review, rate and eventually rank the game based on how much it is being played. They will eventually get a cut of the advertising revenue generated by Kongregate, though in the short term exposure, user feedback and popularity will be the most significant benefit they extract. One of the hooks offered by Kongregate is a set of APIs that allows developers to create contests and statistics that will be saved in the player’s profile.

To date, during the alpha phase of the service, about 300 games have been uploaded.

Users don’t need to be registered to play, but some of the more advanced features like maintaining personal statistics, chat rooms and contests participation are reserved to site members (membership being of course free). In an interview with Red Herring’s Ryan Olson, I mentioned that one of the motivations for gamers is ego/bragging rights about beating a level, hitting challenges and being on the top score leaderboard (the need for consumer services to satisfy one of the seven sins is a notion I learnt from Accel Partner’s Kevin Efrusy) . There is also the opportunity to hang out online in one of the many chat rooms available on the service, where you can interact with other gamers as you are playing.

The screenshot below shows one of the popular games of the moment, The Fancy Pants Adventures (which has been played over 50,000 times). You can also see the live chat on the right hand-side, and if you scroll below the game, you find all the rating, reviews/comments and recommendations about other games that might be of interest.

I have been looking into the different segments of the gaming space for a few months, trying to understand the trends and opportunities that my kind of investing might have. I have been fortunate to meet and discuss with a number of CEOs in the space, including the talented CEO of Boonty, Mathieu Nouzareth, who gave me a great primer on this industry a few months ago. Kongregate was almost the ideal first investment opportunity for me since it bridges the gap between gaming and passion-centric communities, one of my main area of interest. I am very excited to announce that first dip in the gaming space, which has proven to be fascinating so far – even if traditionally it has not been one to generate spectacular returns for investors. We shall see!

I have been asked if users would develop games "for real", therefore increasing the amount of content on the site. My answer is essentially that 1) based on the current set of uploads, we see a lot of amateur game developers uploading interesting demos or actual games, and 2) a user will typically play a given game over and over (and over) in order to beat levels or succeed on challenges. The need to massive daily uploads is therefore less critical than on an audio or video site. Traffic and usage patterns will have the final word on that question at the end of the day.

 

More:

• The official press release
• A great interview of Jim Greer in Gamasutra
• Coverage from TechCrunch, VentureBeat, Reuters,…

Such a small world - even online

I was writing a piece about my latest investment, Kongregate, and was reading Ryan Olson’s piece about the company when I stumbled upon that ad being displayed on the page, just below one of my quotes. It shows Dogster’s Ted Rheingold, in his now world famous dog suit. Dogster is of course another one of my investments.

By the way, if you have a dog or a cat, and they don’t have a Dogster/Catster account, be ashamed! Redeeming yourself is just a click away .

So funny!

Interesting Web 2.0 conferences and events

The busy conference season is upon us again (just cleared TED 2007 which was an absolute blast), and I want to mention two events where I will be speaking in the coming month:

WEB 2.0 EXPO / APRIL 15–18 (Moscone Center, San Francisco CA)

The Web 2.0 Expo is a spin-off of the highly popular Web 2.0 conference (now called the Web 2.0 Summit), that will feature a large number of Web 2.0 companies exhibiting their products, as well as a multi-track conference that will be preceded by a number of workshops. A big shout to my co-chair of the Search SIG Dave McClure for co-organizing this event.

On the 15th, I will be running the workshop Starting Up 2.0: Strategies for Pitching, Financing & Growing Your Web 2.0 Startup with my good friend Rob Hayes from First Round Capital. If you have attended some of the Camps (BarCamp, TagCamp, MashupCamp,…) I have run a number of sessions about Angel/VC financing, trying to give participants insights on the funding cycle. We will have 3 hours to cover the startup process, and there will be a lot to talk about. We will keep the scripted part of  the session to 2 hours tops so that we can make sure that we address as many of questions of the audience as we can. Feel free to send me an email or leave comments on this post if you plan to attend the workshop, and have specific issues you would like to see addressed.

On the 15th, I will participate to a the Panel on Venture Capital 2.0: Bright Future or Broken Forever?. Since there will be six of us on stage, and we are all very opinionated, it promises a fun debate. I am really looking forward to the conversation with David Hornik, Chris Moore, Josh Kopelman, Michael Eisenberg (who we don’t get to see often enough out here). Mike Arrington will have the "interesting" task of keeping us on topic and/or schedule.

SOFTWARE 2007 / MAY 7–8 (Santa Clara Convention Center, Santa Clara CA)

My friend MR Rangaswami has organized the Software conference for a number of years now. We met a long time ago when I was still an enterprise software investor, and have kept in touch to compare notes on the evolution of systems in the enterprise world. MR has asked Ismail Ghalimi – the CEO of Intalio, organizer of the Office 2.0 conference and talented IT Blogger – and yours truly to run an Enterprise 2.0 theme at Software 2007, which will span across 4 panels (titles listed below are work in progress):

• What does Web 2.0 mean to the enterprise beyond the technical alphabet soup
• Enterprise 2.0: Meet the companies
• Office 2.0: Meet the companies
• Enterprise/Office 2.0: the CIO point of view

Our goal is to set the scene in the first panel, establishing what 2.0 means in the enterprise context and where we have seen actual usage from corporate clients. “Meet the companies” will feature 4 startups building products in a particular segment in the Enterprise/Office space and will both their product vision and their market development strategy (against the incumbents). We will wrap up the discussion with a panel of three/four CIOs and get their views (“So what ? Who cares ?”) on this new generation of applications and services. I will post the formal program and names of participants in these sessions in due course.

Readers of Software Only can get a $300 discount off the regular price by clicking on this link.

UNDER THE RADAR: WHY OFFICE 2.0 MATTERS / MARCH 23 (Microsoft Campus, Mountain View CA)

I will also be attending (but not speaking at this time) the Under the Radar event on Office 2.0 put together by Debbie and Alison over at DealMaker Media. It will be interesting to listen and meet 32 company CEOs in the office 2.0 space. Readers of Software Only can actually get a discount by registering through this link.