A belated thank you

When I started leading venture capital investments for Bessemer in 2003, I was scared out of my mind. I suspect a lot of young investors feel similarly. It's incredibly frightening to commit millions of dollars of other people's money to a young (typically loss-generating) startup. There's a good chance you'll never see that money again. It's nerve-racking. I learned to think of the concept of being a "fiduciary" in the following manner: it's actually a lot more painful to lose a bunch of someone else's money than it is to lose your own.

My response to the fear -- which, after nearly a decade in VC, hasn't subsided much at all -- was to start slowly and conservatively. My first investment was $50,000 in a two-person startup called Hypertag. The founders and I decided to shut it down 6 months later, and I got back about $35,000. I felt like crap, and in an effort to cheer me up, one of my partners jokingly told me to think about it as a 70% return. Two of my next investments were much larger but in later-stage companies: Gracenote and Gerson Lehrman Group. Those worked out well and helped to increase my confidence.

A couple of years later, I started to do some "traditional Series A" venture capital deals, which I define as 7-figure investments in companies that have raised no more than a few hundred thousand dollars and have little or no revenues. It's the scariest type of investment one can make because there's enormous risk combined with serious dollars at stake. Of course the tremendous upside justifies the risk, but it can easily take 4 or 5 years to know if a Series A investment was wise or foolish.

After seven and a half years making venture capital investments, I tasted my first Series A success a few weeks ago. The founders preferred not to disclose the news, so we kept it quiet, but somehow the sleuths at TechCrunch got the dirt and published it here.

I helped Fabrice Grinda get started with OLX in early 2006, and after he brought on co-founder Alec Oxenford, I led the Series A financing with General Catalyst's Joel Cutler later that fall. At $10 million, it was a very large first round of capital, and, like every other investment I have made, it was scary.

But Fabrice and Alec are a fantastic tag-team, and it was a pleasure to watch them in action over the last four years. It was also relatively low stress because the business metrics improved almost every single month since the day we invested. When the company's web sites surpassed 100,000,000 unique visitors in a single month earlier this year, I knew some large Internet leaders would soon come calling.

Despite it's $15 billion dollar market cap, I didn't know much about Naspers until recently. They're based in South Africa and have a uniquely global perspective that I've rarely seen in Internet management teams. Naspers proposed a strategic deal to OLX a few months ago that was too compelling to pass up.

It is with mixed feelings that I celebrate my first Series A success. On the one hand, it's nice to earn a profit and see validation of an early-stage conviction. On the other hand, we sold our stake in the company, so I no longer get to work with the talented founders and their star executive team nor will I get to benefit from the upside that lies ahead for OLX. I've become fond of Joel Cutler's comment that as investors, we were "invited guests." Together with the founders, we decided it was time for us to depart.

Now that the news is out, I submit a public statement of gratitude to Fabrice, Alec, Ariel, William, Mark and the many other key contributors. Thank you for all the fun and capital gains!