True Ventures Looks for Magic in the Crowd of Portfolio CEOs, Not Its Partners’ Brains

6/30/11Follow @wroush

How do you run a venture capital fund with $378 million under management with just four full-time partners? San Francisco-based True Ventures, a six-year-old early stage investing firm, has found a way: you crowdsource a lot of the work of shepherding your investments to the group of portfolio company CEOs themselves.

You can’t go far in Silicon Valley without bumping into True—they’ve invested in Automattic (maker of WordPress), BrightRoll, GDGT, GigaOm, Meebo, Plancast, Sifteo, and a passel of other up-and-coming startups. I’ve spent a fair bit of time recently speaking with True Ventures partners and portfolio companies, and if there’s one thing that sets the Internet- and mobile-focused firm apart from other Bay Area VCs, it’s the strength of the community it has built by encouraging portfolio CEOs to turn to one other for help and advice. It sounds sappy, but at True, “community” is more than just a motto; it’s the business model.

Indeed, the community is such a key part of the firm’s strategy that the partners call it “the platform,” as if it were a key piece of infrastructure software. “We are very much about the platform,” Phil Black, one of the firm’s three founding partners, told me when I visited the firm’s Pier 38 offices recently. “We really want the community to be the experts. Our style of venture capital imitates the open source community in many respects.”

In practice, that means that many of the key strategic and tactical questions that come up during a startup’s crucial early years get referred to other True CEOs, rather than to the partners. If you were an executive at a company backed by a traditional venture firm and this happened to you a lot, you might feel a bit shortchanged. After all, the big Sand Hill Road venture firms are always boasting about how they provide “smart money” and how their partners’ hands-on experience building companies is as important as their capital.

But at True, the situation seems reversed. The firm doesn’t claim to offer a ton of hands-on experience from its partners—and the portfolio CEOs rave about it.

“The part that has probably made me the biggest fan is the platform,” says Alex Bard, CEO of customer support software maker Assistly, which obtained Series A funding from True Ventures in 2010. “They have made a huge investment in connecting all the companies they invest in, and we are all connected in a real-time way.”

Bard shares an example relating to a recent product update that Assistly wanted to publicize. “Historically we haven’t had a ton of success with PR and getting multiple outlets to write about us,” he says. “I sent an e-mail out to the True founders mailing list and said ‘Hey, could anybody spare 30 minutes to chat with me and my head of marketing about how to optimize around product launches.’ Within two hours I had seven CEOs of other companies calling to say they’d be happy to take us through how they were successful. It was priceless.”

True opened its doors in 2005 after Phil Black and Jon Burke, co-founders of a $5 million super-angel fund called Blacksmith Capital, connected with Jon Callaghan, who’d been Black’s colleague at Summit Partners back in the early 1990s. The trio thought there was a need for a … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://www.trueventrues.com/blog Jon Callaghan

    Hi Wade,
    Thanks for your time and effort on this piece. It really captures the magic and power of our platform. Our collective experience as Founders ourselves and VCs has taught us that the best and brightest entrepreneurs build the best products and find the best markets. In our experience, success is never a straight line. Rather than sitting high on a mountain and proclaiming where exciting opportunities will emerge, we prefer to mix it up at the ground level and enmesh ourselves with the power and creativity of our Founders.

    With respect to exits, in addition to those you cite, True was the largest shareholder in XPD which was acquired by Zynga, similarly Milo, acquired late last year by Ebay, Socialcast, acquired by VMWare last month, and also Backtype, which today was acquired by Twitter.

    Thank you again for your time and energy here. We look forward to keeping you abreast of our progress.

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