Original Source: http://onforb.es/1Q7PTG6
The DFJ investment team, with Steve Jurvetson and Josh Stein at center.
As DFJ looks to invest its new $350 million fund, Elon Musk’s phone might ring. The venture firm has done well backing Musk three times already in SolarCity, SpaceX and Tesla. “We’ve been incredibly fortunate in that,” says partner Josh Stein. “The con is that he casts a long shadow.”
No venture firm lasts 30 years investing, of course, relying on a single entrepreneur—even one who draws comparisons to Tony Stark. But as DFJ closed its twelfth fund with largely the same size, limited partners and investment team, DFJ’s partners believe their consistent track record of backing ”real, hard technology” will stand out as newer arrivals on the tech investing scene start to feel the hurt of an uncertain market.
Synthetic biology, quantum computing, driverless cars, artificial intelligence: DFJ favors highly technical and highly ambitious ideas, its partners say. They found Planet Labs founders when they were still working in a garage, partner Steve Jurvetson wrote in a blog post on Tuesday. Led by Twilio, the firm has what Stein claims could be half a dozen multi-billion dollar companies in the portfolio today, its portfolio raising $2 billion in funding in the past year, and returning more than $300 million to investors over each of the past two.
DFJ’s companies tackle moonshots; its own funding, however, isn’t much of a surprise. The new fund is $25 million more than the previous simply to make room for two more investors in an oversubscribed raise. The rest of DFJ’s backers have supported it for years; its partner group remains unchanged.
As tech companies get hammered on the public markets and private valuations start to feel the pressure, VC firms want that yawn-inducing consistency. Stein says DFJ raised its fund painlessly over two months. He doesn’t think that younger firms may have it so easy to raise in 2016. “A lot of newer funds that have been formed recently, [their money] has come from non-traditional partners more exposed to market fluctuation,” Stein says. As an example, Stein points to hedge fund managers. Those flush with cash in recent years may have looked to venture firms as investment opportunities that could provide outsized wins at reasonable risk. When the market takes a major hit, those same investors may be more exposed, putting more pressure on their venture bets to show a quick return.
DFJ would benefit from that new money going away and giving it more room to invest, Stein admits. But he also believes its diminishment could reduce some of the volatility in valuations, a benefit both to investors and entrepreneurs. “The role of technology in driving our economy is going up and not down,” he says. “The volatility we see is in how to value assets.”
And those investors may not be getting into many of the most competitive startup rounds anyway. DFJ, like other name-brand firms, particularly likes to invest in repeat entrepreneurs. It backed SolarCity’s founders in their previous startup; Stein expects to see more startups created by alumni from his portfolio companies Box and Twilio.
If that doesn’t work, DFJ can always get to work convincing its resident Iron Man to get started on something new. Hyperloop, anyone?
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