Web Innovators Guru: An Interview with Venrock’s David Beisel
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really wake up and get excited. And the three founders are just great. Talk about authenticity. They still blog, because they are part of this community they helped create.
X: What about the mobile side? There’s tons of mobile application developers in this area and a pretty good number of mobile services companies of one variety or another. Are you excited about the local mobile space as a potential area for you?
DB: We are investors in uLocate and EveryPoint. I agree, I think there is actually a pretty rich ecosystem here. Mobile is often a challenging space because you have to deal with the carriers and with disparate devices. That being said, if you can crack those nuts, the opportunity is great. Ten years from now, we will all be carrying around this personal media device that’s more than just a mobile phone. It will always be connected, and all the information and connectivity you get out of your connected desktop or laptop, you will also be getting out of this device. The opportunity is tremendous.
X: I would argue that we’ve already got this always-on media device you’re talking about—it’s the iPhone. And Google’s Android mobile operating system looks like it is going to be just as good. Obviously there are some limitations to the iPhone, like it’s not 3G. But I don’t think it’s going to take 10 years—it’s almost here now.
DB: I agree, but I think what we’re seeing now is still just a glimmer. I think it will take a little while to play out.
X: Recently an increasing number of venture firms seem to be getting involved in these really early stage investments or grants. Sometimes they’ll pool with another firm and create a fund like the iFund for iPhone app developers, handing out small to medium size investments. It seems like there is increasing attention to the need for investments that would seem really minor on the scale of things, from the traditional venture point of view, just to help entrepreneurs test ideas and move them closer to being investable. Do you guys watch that, and do you feel it’s important to be involved?
DB: Especially on the digital media side, the capital requirements for launching a company are increasingly small. The ability for an entrepreneur to experiment and see if he can get some consumer traction or paying customers is a lot lower than it was 10 years ago. If entrepreneurs can get investments that are commensurate with what their real needs are, I think that’s great. You see that manifesting with Paul Graham’s thing [Y Combinator], getting people together for a summer or a winter. It doesn’t take a lot of capital; it’s more about the intellectual capital.
At Venrock, especially in the last two years, we’ve made a number of seed investments. I think you wrote about RightsAgent—that’s one we’ve been incubating here internally. And then we’ve done a couple of others on the West Coast. For us, it’s trying to figure out what’s the right amount of capital for what the companies need.
X: I’m assuming that given everyone’s limitations on time, you just can’t afford to do business if you’re going to invest less than a couple million on an equity basis.
DB: You hit the nail on the head. The most important limiting factor is time, it’s not money. It’s trying to figure out what are the opportunities which have the possibilities for bigger exits down the line. We worry less about how much we can put into the company. We worry more about, is it a big idea. Does this company have a glimmer of greatness. That’s the lens we look through.
We’re still trying to figure out the right way to engage with these early companies. Is it getting involved with them on an equity basis right away, or should they be raising money from angel investors and if they want to expand from there, going to the VC community? We’ve seen companies go all routes. But I think there is still a need for venture along the way. While the initial requirements to start a company are lower, I don’t think the capital requirements to build a real sustainable entity have gone down.
X: Is there any news we should be watching out for from Venrock? Are you working on a sixth fund? Any changes of direction?
DB: No, last year was the big year, when we launched the most recent fund and brought a lot of people on to do this digital media effort. There will be more news in 2008 about the things we’re doing in the digital media space. We just launched a fund in Southern California with the William Morris Agency, Accel, and AT&T looking for digital media properties in that region. [For details see this VentureBeat article.] That’s just one example. We have more things coming.
Update 3/28/08 11:30 am: Beisel has sent in a few more examples of funding events and acquisitions among companies that presented at the Web Innovators Group:
- Aerodiet, acquired by About.com in 2006
- Virtual Ubiquity, maker of Buzzword, acquired by Adobe in 2007
- MyPunchbowl, funded by Intel Capital in 2007