« Catching Up | Main | An Ode to Quant Investing »

Latest Stories

• Excel Wankers and Recession Averages
• Sorry, New York is Closed. Check Back Later.
• Catching Falling 2009 Earnings Estimate Knife
• Survivorship Bias in Global Markets
• Talking Positions on a Lazy-ish Retirement Portfolio

August 21, 2006

Sevin Rosen's Retooling

Good cover piece in the current TheDeal on the retooling going on at one of the longest-standing venture firms, Sevin Rosen. It missed the big Internet deals, it saddled itself with many post-boom telecom investments, it has lost its founders to retirement (and wealth) -- and so SR is struggling to redefine itself and find its way.

The answer? Multiple "small" funds (i.e., $300m for a 10-partner fund), a multi-sector focus, an emphasis on seed, and some new GPs over the next few years.

Sevin and Rosen retired in 1987, well before the rise of the Internet. Today, Sevin, 75, still comes into his office on the 16th floor of Dallas' famed 2 Galleria Tower, where the firm and several other venture firms reside, and still advises entrepreneurs. Rosen, 73, who lives in New York, is active in philanthropy and occasionally refers deals to Sevin Rosen.

Following the founders' retirement, the firm's next line of management stepped forward, including current general partners Jon Bayless, 66, Steve Dow, 50, and John Jaggers, 55. There are 10 general partners in all, and one partner: Ram Velidi. Sevin Rosen has always focused on collegiality and consensus among partners who exemplify the founders' affinity for recruiting GPs with leadership experience in technical industries. Most adhere to the ideal of a VC who had entrepreneurial experience and now wants to sandwich a venture career between management and retirement.

This second generation has had a rockier road. The telecom bust in early 2002 proved to be Sevin Rosen's biggest challenge, sending its seventh fund's internal rate of returns into negative territory, according to data provided by the California Public Employees' Retirement System.

....Dow says Sevin Rosen plans to keep raising smaller funds relatively frequently in an effort to give LPs more diversification in terms of vintage year.

Will it work? Well, other than the rapid-fire funds (which is an interesting approach, but one certain to bring out the cynics), the new Sevin Rosen sounds a lot like the old Sevin Rosen. Not that that's a bad thing, of course -- it has been a great firm -- and many of the problems SR is experiencing are systemic, not firm-specific, but many VCs will be watching as SR's LPs wrestle with where to lay the blame for recent portfolio performance.

Sphere It   |   Digg it   |   Bookmark it   |   Stumble it   |   Facebook it