How A Boston Venture Capital Firm Grew Into A Silicon Valley Powerhouse

How A Boston Venture Capital Firm Grew Into A Silicon Valley Powerhouse
Posted by Jake MeLoo on February 27, 2014
Posted in: Tech Stuff. Leave a Comment


Charles River Ventures has quietly emerged as a venture capital force in Silicon Valley.



CRV partner George Zachary

Charles River Ventures

In the fall of 2008, during the height of the financial crisis, raising venture capital to fund your startup amounted to a fool's errand. But PayPal alumnus David Sacks is no fool, and he knew exactly who to tap to get his new messaging service off the ground.

That service was Yammer, and the person Sacks tapped for both money and advice was George Zachary, a partner at early stage venture capital firm Charles River Ventures. In return for its tiny financial investment and strategic advice, CRV was repaid with a handsome profit after Microsoft bought Yammer in 2012 for $ 1.2 billion.

Named after the Charles River in Boston, CRV has quietly emerged as a real force in Silicon Valley on par with better known and more established venture capital firms such as Kleiner Perkins Caufield & Bayer or Greylock Partners. The firm, which moved most of its operations to the Valley a decade ago, has strung together a series of high-profile exits to go along with Yammer. In 2003, almost a quarter of their portfolio was west coast-based, and most of the partners were on the east coast — it's now nearly 60%, and most partners are on the west coast.

“The market perception, especially here or in San Francisco, is that we're not there,” CRV partner Izhar Armony said of the view of his firm's place among the Valley giants. “But results-wise, we're definitely in that group.”

CRV — as the firm is known around Sand Hill Road, the Menlo Park, California expanse that hosts the most powerful venture capital firms in the world — is poised to continue its streak this year, with evidence emerging that its early bet on Zendesk is about to pay off big in the form of a potential IPO of the enterprise software maker. It also recently landed an investment in Pebble, a fast-growing smart watch startup.

“Unicorn” exits, or sales or IPOs of venture capital-backed companies in excess of $ 1 billion, are exceedingly rare. According to CB Insights, 68 investors were able to capture at least one billion-dollar exit in the past decade ending November 21, 2013. That number falls to 17 for two exits, and continues to shrink.

Three firms — Sequoia Capital, Greylock Partners, and New Enterprise Associates — were able to score eight “unicorn” exits each (or 24 total) according to that report in the last decade, a phenomenal track record of consistency. Sequoia Capital recently had one of the largest exits in venture capital history after Facebook bought WhatsApp for $ 19 billion.

CRV is not far behind those firms, though, with “unicorn” exits, included among them Twitter (IPO), Yammer (sale), Millennial Media (IPO), Equallogic (acquired by Dell for $ 1.4 billion) and Netezza (acquired by IBM for $ 1.7 billion). Zendesk will likely up CRV's tally closer to that of Sequoia and Greylock when it eventually goes public.





CBInsights / Via cbinsights.com





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