Happy Birthday, RTP

Exactly one year ago today, September 9, 2011, RTP Ventures officially got started.  It’s been an amazing year, a whirlwind that seemingly parallels the experiences I’ve had at startups I’ve built — setting up basic operations, assembling a team, trying and testing business models and actually putting together a respectable portfolio of investments.  Early successes, early disappointments, we’ve already had our share.  But, overall, I think we’ve done pretty well for a fund that was an idea in someone’s head only a year ago.

Last September, there was nothing.  No office, no website, no business cards, no name, and no reputation.  RTP was a startup.  All that has certainly changed.  Building the infrastructure is least impressive, but necessary.  It is hardly a point of pride, but, like the accounting procedures I ask my companies to set up, a necessary step.  So, everything is there now and we, as a business, have gotten the basic workings of a fund down to a routine.  Leads are processed, discussed, evaluated, and investments are made.  Board meetings are regular, quarterly reports get written.  The process is there.  But I’ve done that before, and it wasn’t the fun part…

My biggest concern, as a new investor in 2011 was being taken seriously.  Venture Capital is an insider-driven business which treats newcomers with skepticism.  To be taken seriously and get a chance to invest in the better companies often takes years of reputation-building, track record management, and PR.  We had no reputation, no track record save personal experiences in venture capital, and shunned PR like the good funds that don’t need PR should.  We set off on a seemingly unusual theme for the times — no Social, Local, Mobile, but Data, Business, Infrastructure.  We did not launch to  glamor-spew on the VC talk circuit.  We did not want to talk about how great our fund will be, but rather, with outward humility and inward confidence, knew it will be once we let the portfolio we put together speak for itself.   We focused on building the best portfolio a new fund can build.  Facts vs. pretense.  And, I think, the facts are starting to speak

In the past 12 months, we made 11 investments.  These investments included two seed stage investments and seven Series A deals.  Importantly, we also did two later stage investments in Fab.com and RichRelevance.  Ability to span the different stages of the VC funding timeline was an important thing I wanted to prove to myself.  I did not want a portfolio of twenty early-stage seed deals one can find on Angel List.  I wanted a mix of promising new companies and a few established winners.  We now have no problem walking into even the largest investment opportunities and being treated with a degree of respect.

We have co-invested with some of the best VCs in the business: Greylock, Andreessen Horowitz, Atomico, Crosslink, Greycroft, and, my home-town favorite, IA Ventures.  We co-invested “peacefully” without resorting to financial outrage, back-door deals, and exorbitant sums like other newcomer big-money international funds we know.    We co-invested, we kept prices reasonable (no Series A closed above $10M post-money).  I was personally interviewed several times by the partners in the established funds who wanted to see who these “new kids” were.  And, happy to say it, I think we passed the test.

For our early-stage companies, we put together a support network that had one person I spoke to describe us as a “mini-Andreessen.”  A compliment in my book.  Personally, I have led three venture-backed startups.  An never did any of my investors pay as much attention to me as RTP has to its early portfolio.  Eight of the nine Series A investors use the same accountant, the same HR firm, which we helped provide.  All know how to put together board decks, all have been given basic training on finance and marketing.  God, how I dreaded going through this myself when starting my companies and how I wished someone would help me this way.

Our portfolio companies are friends and belong to a community.  This is also something I never experience in the past.  The other companies in my earlier investors’ portfolios seemed so aloof and full of themselves.  I wanted this to be different.  We have an amazingly active Yammer group where all the leadership from our companies (early and late stage) share thoughts, experiences, vendor recommendations, advice.  I do weekly video calls with all the CEOs just to “chat” and do not treat is as a board meeting report.  We have done one and two-day business modeling sessions with all the early stage companies to help our tech-heavy portfolio with some of the business tasks that are usually not their forte.  The last monthly company dinner in San Francisco had 12 people attending — and there were no chest-pounding brag sessions.  Just smart people getting to know each other.

More is coming.  I would love to add more functions in-house and become a “macro-Andreessen” — an HR specialist, someone to help with legal, a recruiter, a PR person.  But that takes a bigger fund and, trust me, we’ll get there.

More importantly, during the last year we kept our humility.  RTP has no admins, no associates, no interns.  No one gets to claim they are a VC unless they are really a VC.  We schedule our own appointments, do our own due diligence, write our own reports and memos.  The company’s first meeting is with me.  I pass on companies that don’t fit on the spot, and, if it’s just a matter of fit (vs ineptitude) I offer to make introductions to other funds and actually do that.  And for ones that we pass on after discussion, I send a detailed email explaining our thinking.  No “we couldn’t get the partnership to agree bullshit.”  No one here is allowed to be smug or feel self-important.

Last, but most important, this year could not have been possible without the continued support from our global parent fund, ru-Net.  Leonid Boguslavsky and his firm took an investment risk on funding a group like us… and we appreciate it just like a startup appreciates an early investor.  In a somewhat non-traditional arrangement, ru-Net is more than just a “sponsor” — they are our LP, one of our GPs, a source of expertise and advice.  We have become, essentially, one investor as was hoped for all along.  As we move forward in the coming months and start considering expanding the fund, they will always continue to play a key role in all we do.

Thank you to ru-Net and, first and foremost, to our portfolio companies.  We are proud of you and your willingness to share a part of your bright future.  We look forward to our second year together.