There was a time when Kleiner Perkins, an early investor in Google and Amazon, let its portfolio do the talking. But times have changed, and the well-known firm, with a fresh $600 million early-stage fund, is looking to open a “new chapter” aimed at going “back to the future.”
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To do so, the firm has hired a raft of new talent in search of the next big deal: Social Capital’s Mamoon Hamid, Index Ventures’ Ilya Fushman, and Battery Ventures’ Bucky Moore, along with Monica Desai from Blockchain, and Annie Case from Uber.
To understand the new Kleiner Perkins, Crunchbase News visited the firm’s San Francisco office for a chat about what it’s up to.
Here’s what Hamid, Fushman, Moore, and long-time partner Wen Hsieh had to say about the early-stage market, their investing plans, the founder-friendly venture landscape, and where they are focusing individually.
This $600 million fund is larger than its predecessor, KP 17, which tipped the scales at a comparatively diminutive $440 million.
But despite the more substantial capital sum, the firm isn’t giving itself more time to put the money to work. According to its partners, Kleiner invested KP 17 in about a year and a half, against an initially planned 2.5-year investing window. Rising deal sizes, shrinking time between rounds, and pre-empting have worked to boost the pace of venture dealmaking.
According to the firm, KP 18 is on track to deploy at a similar, if not more rapid, pace.
Focus on Early-Stage
With the amount of capital available, funding rounds are getting larger (notes from our quarterly reporting here and additional color here). The changing size of venture rounds has amended traditional venture series sizing. What was once considered a typical Series A round is now often a Seed stage investment, a prior Series B amount is now a standard Series A, and so on.
Kleiner Perkins, in its latest fund, plans to allocate 70 percent of its dollars toward Series A investments, according to its partners. The partners also noted that Seed and Series A deals are increasingly becoming “efficient auctions,” which can lead to higher prices and therefore larger rounds.
Deal size isn’t the only thing changing, however. While founders are becoming more selective about who’s writing the checks at the Series A stage—they want money and expertise—a firm’s brand still matters, and few names have the historic import of Kleiner Perkins.
It’s kind of like going to college, Hamid said. You can get a degree from several universities and online schools, but people still want to go to Harvard and Stanford for the brand and reputation that come with the name.
As competition steepens amongst venture capitalists hoping to cash in on early-stage deals, leverage has been partially reallocated to the founders they’re investing in. That change has led to a new class of atypical venture capital firms, and it’s led to more traditional firms like Kleiner Perkins to change up their look to emphasize how founder-friendly they truly are.
“Getting a pitch deck is rare now,” said Hamid. Instead, Kleiner Perkins sends its deck to potential portfolio companies for vetting.
“The founders we work with do a lot of hard work to make sure we’re the best investment partner for them,” he added. And while the brand helps Kleiner Perkings get an edge, the deal typically comes down to the expertise that each partner can offer a portfolio company. And since leading a Series A usually comes with a board seat, it would make sense that founders are picky about who is allowed into their leadership and accountability structure.
The Direction Of Money
With a raft of new partners comes a variety of focus and investment expertise. Here’s where a handful of the firm’s partners are looking to dole out money.
Zooming in from Shanghai, Hsieh shared that he’s focused on hard tech, which he emphasized is distinct from frontier tech and deep tech. His investments include metal 3D printing system Desktop Metal, along with Motiv, Proxy, and SpinLaunch.
SpinLaunch is one of Hsieh’s space-tech investments. The company’s goal is to make satellite launch costs up to 20 times less expensive. When that’s accomplished, he said the startup will be “significantly disruptive.”
Fushman’s focus, meanwhile, isn’t surprising given his stint at Dropbox. At Kleiner Perkins, he’s working on “next-gen” work tech. (Slack, Zoom, and others have made the category all the more attractive, we presume).
The VC also intimated that the change from certain economic models (manufacturing) to more modern roles (knowledge work) will expand the market for work-focused technology products—at least in the sense of there being more seats to sell to, we figure.
Moore shared that he invests in companies that make new infrastructure for others to build upon. Naturally, that means that these infrastructure companies interact with, and even cater to, other Kleiner Perkins’ portfolio startups, he added. One startup he’s invested in is San Francisco’s Netlify, which deploys, builds, and hosts static websites and apps, according to its Crunchbase profile.
Moore added that he was surprised to discover the number of investment opportunities in Europe. He said that the fact that there’s more accessibility to knowledge now than ever has made idea sharing easier. Plus, there’s been a host of exits to fuel Europe’s ambition.
Hamid’s focus at Kleiner is collaboration and productivity technology, as well as the general healthcare sector. He counts Slack and Castlight Health among his prior investments.
In the healthcare space, Hamid pointed to Viz.AI, which raised $21 million in a Series A round led by Kleiner last year, as a promising startup to watch. The company applies artificial intelligence to medical images to show when a patient could be having a stroke so they can receive the time-sensitive care that they need. More than 200 hospitals in the U.S. are using the technology.
Fushman, at one point, said that he felt as if KP went from being a Goliath to more of a David. As the firm once rode on the reputation of some of the biggest deals in venture capital history, its new era has a lot to live up to.
That all said, whether it’s the new no-name fund or Kleiner Perkins, historical returns will tell the story better than anyone else.