Menlo Ventures Steps into the Spotlight With Deals Like Uber and Poshmark

2/27/13Follow @wroush

Venky Ganesan, the newest managing director at Menlo Ventures, likes to tell a story about one of his business idols, Sidney Weinberg. When Weinberg was building Goldman Sachs into a financial giant in the 1940s, ’50s, and ’60s, Ganesan recounts, he employed a full-time public relations officer whose sole job was to make sure the firm was never mentioned in the newspapers. Weinberg’s philosophy was that investment banking should be about the clients, not the bank.

For decades, Menlo Ventures had a similar distaste for the spotlight. “They didn’t believe in PR,” Ganesan says. “People who were serious about venture capital knew about them and their great track record, but for a long time they were the silent company.” (The phrase also evokes Northwestern Mutual, long known as “the quiet company” because it didn’t advertise.)

But now Menlo’s silent days have ended. Spurred on by the aggressive efforts of younger firms like Andreessen Horowitz to cultivate media attention, the 37-year-old Sand Hill Road firm has burst out of its shell over the past two or three years. Among other things, Menlo has embarked on a total overhaul of its brand identity, launched a $20 million early-stage investing fund, and invested heavily in a group of young, consumer-facing startups.

That’s by no means the firm’s traditional focus—it’s far better known for its successful investments in enterprise hardware and infrastructure companies like 3Par (data storage), F5 Networks (networking), IronPort Systems (security), and Acme Packet (switches). But over the years, Menlo did occasionally put money into consumer-oriented businesses—Hotmail, Roku, and Siri were all among its investments. The effort since late 2011 has been to ramp up those sorts of deals, and it has worked: the company has signed term sheets with hot consumer companies like Fab, Uber, Poshmark, Warby Parker, Getaround, and Tumblr, among others.

Shervin Pishevar, venture advisor at Menlo Ventures

Shervin Pishevar, a venture advisor at Menlo Ventures.

“Building the consumer practice and doing the rebranding has been a really incredible experience,” says Shervin Pishevar, a prolific angel investor and serial entrepreneur who is a venture advisor at the firm. “In less than 600 days we have made quite an impact, and people are recognizing that on the outside, which is awesome.”

How you rebrand an already-successful venture firm—-and why you would even want to—are interesting questions, and they’re being asked at a tumultuous time for the venture industry. The number of firms that are able to raise new money from limited partners is on the decline: 182 firms raised funds the U.S. in 2012, compared to 215 in 2008, according to data from the National Venture Capital Association. Older, larger firms like Menlo are likely to survive the industry’s ongoing downsizing, but they still have to compete for the hottest deals with specialized early-stage funds and upstarts like Andreessen Horowitz (which, in a fashionable nod to text-speak, shortens its URL and Twitter handle to a16z).

Menlo has $4 billion under management—putting it on a par with Sequoia Capital, Battery Ventures, Draper Fisher Jurvetson, and a handful of other very large funds—and is currently investing out of Menlo XI, a $400 million fund. “Generally, at a firm that has been around as long as they have, with the track record they have, you don’t think about reinventing yourself,” observes Ganesan. “Why fix something that’s not broken?” He says was enticed to join Menlo Ventures after 15 years at Globespan Capital in part because “these folks were incredibly hungry even though they were incredibly successful.”

To orchestrate its rebranding, Menlo started by hiring Jennifer Jones & Partners, led by Silicon Valley marketing veteran Jennifer Jones, formerly an exec with top communications firms like Regis McKenna and Ketchum. “Jennifer did a ’360′ study with us, talking with outside board members, lawyers, bankers, consumer and enterprise-oriented LPs, and we heard a lot of positive feedback,” says Menlo managing director Mark Siegel. “Things like ‘My director from Menlo is the hardest working person on my board.’ We heard a lot about having deep domain expertise. And we have always had a deep research focus here.”

If you go to Menlo’s spiffy new website, unveiled last summer, you’ll notice the slogan “Venture Right,” which was the firm’s way of boiling down its brand image into something pithy. “The whole idea is making sure we are the most knowledgeable about an entrepreneur’s industry of any investor they are going to talk to; making sure we are their hardest working board member; and making sure we are doing right by their company,” Siegel says.

That’s all a legacy of the company’s founders, including Dubose Montgomery, who is still a managing director. Montgomery wasn’t a silver-spoon type. He “came from a very poor town in South Carolina, and was the only kid from his high school to go to college,” says Siegel. After getting degrees from MIT and Harvard, Montgomery moved to then-nascent Silicon Valley, did some consulting work for semiconductor companies, then decided he could … Next Page »

Wade Roush is Chief Correspondent and Editor At Large at Xconomy. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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