Homerun hitters take on small ballers at Venture Shift

'Moneyball' view of investing vs swinging for the fences

Vator and Bullpen Capital’s Venture Shift event is this Thursday in San Francisco (get tickets here!).

I’m moderating the panel No. 4:

What’s the new venture hit/what’s the exit environment look like? $100M exit or $1 Billion IPO? With so many start-ups being funded with under $1M, are the new investors looking for M&A exits? What's the best strategy: the "Moneyball" view of investing (hitting singles and doubles) or swinging for the fences? 

• Noah Doyle (Javelin Venture Partners)
• Stacey Bishop (Scale Venture Partners)
• Michael Neril (WIN)
• Alexander Mouldovan (CF/Marketo)
• Thomas Korte (AngelPad)
• Ann Miura-Ko (Floodgate) 

I’m a big fan of the singles and doubles game.  My investment banking/advisory practice focuses on the $10mm to $100mm enterprise value weight class of companies – where it’s as much about product strategies as it is about finance.    

But I also appreciate that you can’t fight macroeconomics, and there’s a strong argument that venture investing is a “hits business.”  Ann Miura-Ko of Floodgate still believes VC is a business of “exceptionalism.”  Ann breaks it down this way: “About 1,500 VC backed info tech startups go into the pool each year, roughly 80 achieve an exit of greater than $50mm, of those, about 15 go for greater than $500mm – our job is to get into as many of those 15 as we can.”

Stacey Bishop of Scale Ventures points to recent successes in enterprise software like Splunk, Service-Now, Yammer, Buddy Media and Vitrue as proof that homeruns not only drive returns for early-stage investors, but also pull multiple tiers of capital out of the park.  As she put it “for some investors those investments were homeruns and for others they were doubles or triples, but in a very short time horizon.” 

So, some very savvy investors are still playing big ball and looking to hit it out of the park.  But what about the “small ballers?”  Michael Neril of WIN paints a different picture, he says the barrier to entry to starting new companies has come way down due to cloud platforms, global broadband penetration, and a number of other factors.  Michael says since “less capital is required to get a startup to market, that the exit options for many companies are expanded – free of liquidation preference overhangs and able to pair with cash flush strategic buyers looking for new products and talented teams.” 

Be it a new global enterprise, or a tight team, you still have to build a great business, and be willing to stick with it through good and bad times according to Noah Doyle at Javelin Venture Partners.  He says every billion dollar company he knows of “had periods of darkness with only hints of light at the end of the tunnel.”  He also points to the fact that exits are highly unpredictable, he asks “was Oracle on Involver or Vitrue’s list of likely acquirers?”  

It’s fascinating topic and it looks like we’re set for a great discussion at Venture Shift.  As a “small baller” I’m excited about the ability for lots new companies to make successful contributions to the economy.  Could it be that while the ability to create lots of small companies is great for many entrepreneurs and angel investors, the VC business remains be a homerun business?  Or is there a greater shift in the venture landscape than we may realize?

The only way to know for sure is to come to Venture Shift and hear Panel No. 4!!!

See you there. 

(Image source: sfgate)