Celesta Capital invests in deep tech companies, with a focus on hardware, out of a $400M fundRead more...
Data Collective invests in early and seed stage rounds, giving them up to $3M in initial investments
There has been a big debate over the last few years over whether the Series A crunch is real or not.
What everyone can agree on, though, is that there are definitely more seed and early stage funds now than every before, and more people willing to give more and more money to young companies looking to make it big.
But just who are these funds and venture capitalists that run then? What kind of investments do they like making, and how do they seem themselves in the VC landscape?
In the coming weeks, we will be highlighting members of the community to find out.
Ocko has nearly three decades of experience as a technology entrepreneur, operating executive and venture capitalist, both in the US and in China, where he has advised multiple government entities over the last two decades. Matt has been a Partner of VantagePoint Venture Partners and was a founding General Partner of Softbank Technology Ventures.
His investments include Zynga, Facebook, Tango.me, Cotendo, XenSource, Flashsoft, SupportSoft, Verisign, Alantro, UltraDNS, Fortinet, Akimbi, MetaWeb, Kenshoo, BranchOut, and Impermium.
Ocko also founded, and was VP of R&D, for Da Vinci Systems, an e-mail software vendor with over 1 million users world-wide prior to its acquisition.
VatorNews: What do you like to invest in? What are your categories of interest?
Matt Ocko: Our extensive network of experts allows us to intelligently assess companies all along the technology stack from semiconductors and databases, to analytic and dev tools, to end applications in industries such as agriculture, manufacturing, healthcare, synthetic biology and biotechnology, transportation and logistics, and finance, as well as others.
VN: What do you look for in companies that you put money in? What are the most important qualities?
MO: We like to invest in strong (but not necessarily glamorous) teams, with clear technical and leadership skills, with a deep and proven tech advantage addressing huge problems, typically in areas that are absent of frenzied competition and over-investment.
VN: What is the investment range? How much do you put into each startup?
MO: Our model is flexible and we always want to have a conversation with the entrepreneur about what the right amount of money is for the company at that specific time. We are also sensitive to founders maintaining an appropriate level of ownership in their company. With that said, our typical initial investment is between $250k and $3m, though we have written both smaller and larger checks. We also maintain capital to participate in follow-on rounds and recently led Planet Labs $70m Series C.
VN: Is there a typical percent that you want of a round? For instance, do you need to get 20% or 30% of a round?
MO: We actually have modeled out VC returns over the last 30 years, and concluded that it is better for an early-stage fund to be early in *multiple* great companies with 10-15% than constantly insist on 20-30% and lose access.
Our rational approach to cap table structuring also makes us a friendly and preferred partner for our fellow top-decile colleagues running larger funds whose model requires them to have bigger pieces.
Finally, as companies take longer to get to IPO, and raise an increasing number of — and increasingly large — rounds, for early investors to demand and keep 20% at each round, with all participants also taking pro-rata, can create an unsustainable cap-table situation for founders and employees. They basically become employees of the investors. This is a situation we want to avoid whenever possible, and so a smart, long-term approach as opposed to a rigid philosophy on ownership is our approach.
VN: What percentage of your fund is set aside for follow-on capital?What is the size of the fund?
MO: We typically reserve 50% of each fund for follow-on. Our current early stage fund, our 3rd, is about $150m in size, and we just closed another separate fund of similar size to support our existing portfolio companies as they grow.
VN: Where is Data Collective currently in the investing cycle of its current fund?
MO: Both DCVC III and the DCVC Opportunity Fund are less than a year into their investing cycle.
VN: What series do you typically invest in? Are they typically Seed or Post Seed or Series A?
MO: We invest comfortably at the Seed and Series A. Our deep technical bench allows us to gain conviction and invest in Seeds with confidence, while our fund size allows us to comfortable lead Series As, as well.
VN: In a typical year how many startups do you invest in?
MO: We aren’t targeting a particular investment pace, but looking backwards we make ~30 new investments per year out of the 1,000+ companies per year we evaluate.
VN: Is there anything else you think I should know about you or the firm?
MO: We really have taken a transformative approach to VC by giving true — and substantial -- carried interest to a large network of world class experts, all incented to support DCVC’s portfolio companies as a whole instead of a pet project or two. This is a marked departure from the old Darwinian model of venture partners and EIRs, and one that provides us significant leverage for helping our founders and their companies.
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