Jeff Clavier's Software Only

Announcing SoftTech VC’s $12M seed fund – the Return to the Dark Side

After 3 years of angel investing in 20+ Consumer Internet startups (and profitably selling 5 of them), I am very excited, and humbled, to announce the launch of my very own VC fund, SoftTech VC II, L.P. Some of you may wonder what is actually the difference between what I have been doing until now – after all I am still referred to as a VC by many – and this new $12M fund.

One major difference: I have taken the step (back to the Dark Side ☺) and have raised outside capital, from a mix of fantastic institutional and private investors. Angels invest their own money, VCs invest capital they have raised from others - as well as their own since it is market practice that Fund Managers also contribute to the fund’s capital. In most cases, it is extremely difficult to raise the first fund of a new firm. Despite great individual track records, it might take a year or two of effort to assemble a syndicate of Limited Partners (this is how people investing in VC funds are referred to) willing to back a new team.

When I left my previous fund (Reuters Venture Capital), I wanted none of that: my passion was working with early stage entrepreneurs, supporting them with time, cash and connections. And since I had zero track record in the consumer internet space, thinking that I could raise outside capital in 2004 would have been a total fantasy. That’s why, like so many entrepreneurs, I decided to bootstrap my own startup – using some of the family’s savings and generating cashflows from a few consulting gigs. It just so happens that the “market” I had decided to enter was early stage investing… in other startups. Last June, serendipity helped me decide, and eventually secure, the next logical step for SoftTech VC. As many friends in the angel and VC community were asking me whether I was thinking of joining an existing firm, or raise my own fund at some point, a few people hinted that they would be really interested in investing in a fund if I was to start one.

A few more discussions and one PowerPoint, later the core foundation of my new fund was there:

• invest in 30 to 40 seed stage startups
• average “bite size” of $250K, ranging from $100K to $500K
• able to lead, co-lead or follow other firms or angel syndicates
• focusing on consumer Internet, but with a great flexibility to enter new sectors opportunistically • open to a few non Silicon Valley deals
• capital efficiency, great teams, differentiated ideas and flexibility on “how big it can become” will be common characteristics shared by the companies we invest in
• working hand in hand with the best firms in Silicon Valley, and the usual suspects in the acquisition gang, to build a successful outcome for everyone involved
• I would be the sole Fund Manager of the fund, with the support of a fantastic advisory board: my friends Jon Miller, Josh Kopelman and Reid Hoffman

The actual size of the fund was the subject of an interesting discussions, tossing around different numbers that all would have made sense: $5M, $10M, $20M,… A number of factors led us (my investors and myself) to decide that $12M was the right amount, and a significant portion of the fund was subscribed in just a few days, with final allocations having been made a short time thereafter. You have two ways to look at how long it took to raise the fund: 3 ½ years of hard work since I started investing, or a few weeks. All this would not have happened without the support and wisdom of the great investors who decided to follow me in this adventure: Jon Miller, Reid Hoffman, Josh Kopelman, Geoff Ralston, Jim Bankoff, Mark Fletcher, MR Rangaswami, Loic Le Meur, Brad Feld, Frank Caufield and his firm Darwin Ventures, Tim Chang and the whole Norwest Venture Partners team. And no, I am not naming everyone – some investors want to remain “stealth” and I obviously will respect it. But thanks to ALL of you.

I am used to always direct any bit of attention I get from the media to the real heroes: the entrepreneurs I have the privilege to work with, building great companies, capturing markets and having fun at the same time. I am therefore super psyched to introduce the first four investments of SoftTech VC II. Yes, four. Been busy this summer, between forming the fund, selling two companies (Yay Kaboodle and Maya’s Mom!), and getting these four to the finish lines.

I will write a post about the fund’s investment areas of interest later this week, and want to share a quick background to these new investments:

• SocialMedia.com was co-founded by my good friend Seth Goldstein, and has been building an infrastructure and an ad network targeted at social network application developers. The company will help these developers manage, market and monetize their applications.  After just a few weeks, last Friday’s revenue on Facebook alone, was over $10K - most of which was distributed to independent developers.
• Active Athlete Media’s focus is active consumers who participate in sports, and the advertisers desiring to reach this passionate audience engaged in the sports they love, on thousands of mid to long tail websites. To date, I had been reluctant to jump into a sport-centric community (passion centric communities will still have a strong representation in the new portfolio). However a monetization solution like Active Athlete’s, which has been steadily growing and generating revenues, became very attractive in order to set foot in the category.
• Satisfaction Unlimited announced its funding mentioning me as an angel investor just last week, but I am pleased to point out that it is actually SoftTech VC II that made this investment. I have known the co-founders of the company, Thor and Lane, for a long time, and saw their concept of a People-Powered Customer Service being refined and improved over the course of several meetings through the summer, and could not pass on it.
• Grouply is one of these “The World Needs” companies where one day I decide that a product or service needs a fresh start. There are hundreds of millions of users of message boards, email lists, forums and online groups products like Google Groups and Yahoo Groups, and they have not evolved for a long long time. Grouply will help solve that by enabling users to easily adopt a richer and more powerful experience for their existing online groups.

One of the key factors that have influenced my decision to get on this journey is the sheer number and quality of many of the companies that I have had a chance to be introduced to. I feel extremely lucky to have the best job in the world, and to be given the opportunity to take my passion to the next level.

Back from Le Web 3, and I am so glad I was there

Unless you have been away for a week in an Internet-deprived location, or don't bother reading blogs anymore, you are at least aware that a conference called Le Web3 took place in Paris (France) last week, and that a very profound and passionate controversy ensued - initially led by mostly negative feedback and subsequently by a wave of positive ones.

I rarely take part of blogging “shitstorms” - unless one of my companies is right in the middle of it of course - since things related to angel investing happen largely behind closed doors. However this time, I ended up in the middle of it. First because my good friend Loic, the organizer of Le Web 3, was taking a beating which turned very nasty and personal - to the point of often drifting away from issues with the conference and focusing on personal anger against him. Second because I ended up driving a large part of the second day of the show as Loic was busy dealing with the “insertion” in the program of Shimon Peres, and French Presidential candidates Francois Bayrou and Nicolas Sarkozy. Since we added 90 minutes of content in the program, whilst trying to keep every speaker who made it to the show in said program, we had to plan (and re-plan) almost in realtime. So some of the complaints from speakers about the last minute changes, the recombination of panels, etc. should also come my way. I will only note that Bruno Bonnell, the CEO of Atari, flew from New-York especially for the conference, and only made a joke when pointing out that he could taken the next flight out had he known that his panel would be delayed by 3 hours (my doing, again). And this is a guy running a public company.

Loic has just posted a very detailed response to the criticism he has received, and so I won't cover the same topics. I would however like to share some reflections I have had at the conference and since then:

• As I said in my closing remarks at the conference, Le Web 3 might have had issues (and the magnitude of these issues really varied from one attendee to the next) but it was a very important event. It was the first time I saw the European ecosystem (like the one we have in Silicon Valley) come together in a palpable way. Young startup entrepreneurs hanging out with more experienced ones, potential partners from large Internet or telco companies, and - at last I should say - investors. I was pleased to see a large number of VCs from all over Europe chatting around with companies presenting at the startup corner or just attending the conference. Since I am not attending European conferences at the same rate as US ones (!!!), I would be happy to be proven wrong but I heard it many times from attendees (the happy ones).
• There was a disconnect between some of the audience and the intent of the conference, that we'll need to address in the future - provided that there is something beyond Le Web 3. This year's program was meant to be a departure from Les Blogs, with a much broader scope and ambition - the Web as a platform, for technology, business, media, etc. but also for culture, society and politics. This shift seemed clear to me, but there were people in the audience expecting a new iteration of Les Blogs - which is obviously not what they got.
• Like Ross, I think that as disrupting as it was, it was a good thing to add Peres, Bayrou and Sarkozy at the last minute despite the obvious risks involved in doing so. I was really disappointed, and embarassed, at the demonstration that many influential French politicians are or feel completely unable of entering into a conversation in English. Why can't they all be like Christine Lagarde, the Minister of Foreign Trade, who has a perfect command of Shakespeare's language and is super smart.
• Loic called for an end of blogger conferences. I am actually longing for conferences recognizing that the content part of the program is second to the networking opportunity. I paid almost $5,000 (if you count incidentals) to attend the Web 2.0 conference this year, and in 3 days I must have spent a maximum of 3 or 4 hours in the room. Why ? Because I was so busy meeting or networking with so a ton interesting executives in the audience. I had a very similar experience at Le Web 3 - until I took over from Loic and then almost ran away from people because the focus was on the program.

I think that Le Web 3 went way beyond the achievements of the first and second edition of Les Blogs, despite or maybe even thanks to the controversy. In any case, I want to congratulate Loic (again) for putting it together, and want to encourage him to push for the limits for next year's conference - or whatever ends up materializing.. in less than 6 weeks. And I hope that this time he will listen when I say that 30 mins is *way* too short for a panel - but that's another story.

PS: I was asked to list my favorite sessions/speakers. I thought that the two panels on gaming were really interesting (thanks to the panelists, not the moderator - me - who demonstrated that he was still very limited in his knowledge of the gaming market). And I really liked the talks from Danah Boyd and Hans Rosling.
PPS: I have to give a special shout to the Netvibes party. As many people mentioned, the music was a bit too loud to have networking conversations but man the dancing was good.
PPPS: I had to update this post with the amusing cartoon that the unique Hugh McLeod just posted. As usual, a pleasure to hang out with you in Paris Hugh.

Tags: lemeur, leweb3

No I never left the building, I was just busy working in the basement

My friend and European VC blogger Fred Destin made an amusing comment in one of his blog entries: Jeff Clavier has left the building, following a discussion I had had with Rick Segal at StartupCamp in the midst of the three sessions I led that day. I basically told Rick that I was in need of recapturing part of my life/time and blogging - both reading and writing - had been the elected victim. So yes, and I have to apologize to my readers, I had largely left the building because of a number of (good) things going on with my portfolio companies and my own business. And my reading had been limited to a few feeds (TechCrunch, GigaOm, VentureBeat, PaidContent) integrated in my Netvibes home page, providing me with the key info regarding my industry.

So thanks to all having emailed me, or blogged, about their concerns: all is well, just incredibly busy with my work, investing and then working with my companies, as well as spending a lot of time speaking at, and attending, conferences. Just as a reference point, four of my investments officially launched their service in the past 10 days.

Oh yeah, and when you are busy and try and make so many things at the same time, you f..k up, like I did last week: I was getting out of my car - on the phone with a company, typing an email (on the phone) to another, and picked up my bag which was in the trunk of my car. In said bag, which was open because I got a call as I was taking something off of it and forgot to close it, my 3 month old MacBook Pro - which flew off the bag to implode on the floor of the parking lot of my office. Fixing the Mac would have cost about $1,500 so decided to get the brand new MacBook Pro for just a bit more money: faster, larger disk and most importantly: it does not burn your b...s when you are using the machine on your lap. The only downside is that Apple seems to have changed the keyboard which now has a very bizarre touch when you type, and makes an annoying squeeky noise.

Bye bye SiliconBeat, Welcome VentureBeat

It is now official! Matt Marshall has removed the password of his new blog/site and has announced the launch of his own independent venture: VentureBeat. He will keep on covering the venture capital and startup world that he had covered with a lot of talent over the past few years - as a newly minted entrepreneur. I had lunch with Matt last Friday and he was both excited and nervous as he was putting the final touches of this launch. In his inaugural post on the site, Matt clarifies his motivation for going solo and some elements of his plans:

On Friday, I will serve my last day at the San Jose Mercury News and will no longer be blogging at SiliconBeat. VentureBeat has become my sole occupation and focus.

My Mercury News colleague Michael Bazeley and I launched SiliconBeat.com almost two years ago, in an effort to respond to the new reality of online media. The blog began as an experiment, taking up an hour or so of my day. Soon, it became much more: Baze and I found ourselves spending several hours daily on a blog that was supposed to be outside of our day jobs at the Merc. Baze, showing more sanity, pulled back from SiliconBeat and has taken a job managing the Mercury News’ Web site. For me, SiliconBeat continued as a labor of love, a way to filter the goings-on of this fascinating place we call Silicon Valley. Yet I was doing too much. So I approached the Mercury News, and told them I wanted to go out on my own.

To my delight, the Mercury News has become my first customer. It will syndicate the content I produce here. It has the right to run it in the paper, and to put it on their Web site. For me, it is a great deal. The Merc is the valley’s paper of record. It is my first read in the morning, and what I do here at VentureBeat is linked with the Merc’s mission. Like most of the people at the Merc, I care about the community in a broader sense. That is why I’m covering things from a geographical standpoint, as opposed to an industry niche.

As I said in my comment on the “old” SiliconBeat: Smile Matt, you are now an entrepreneur like the startup guys that you have been covering. Congratulations for the move!.

Update: in irony, poor Matt is facing one of the worst nightmares of the startup CEO whose service is launching and ends up being taken down by traffic or bugs. VentureBeat.com has been down since this morning, and shows no sign of immediate recovery. I was with David Hornik this afternoon and he could help but chuckle “That's why people host their blogs on TypePad” - which is also going down sometimes, but that's another story.

Tags: siliconbeat, venturebeat

Experimenting with a few services on this blog

I have always tested a number of tools and services on this blog, to the point of sometimes making the page load time untolerably long (apologies for that - obviously not intended). One of the areas of experimentation is advertising, and you might have noticed sponsored links, banners, both on the blog and on the feed. My motivation is not to make money that way (I would not go very far with the amounts generated), but to figure out how mainstream consumer advertising programs "work" on social media content. The last one - that replaced AdSense - is , Amazon's new advertising program called Omacaze Links. Initial results aren’t too convincing yet – but we’ll see how that automatic contextual matching combined with behavioral targeting performs. To date, I have received the best results from the FeedBurner advertising network inserting ads in my feeds.

I have also added a pretty cool community building feature called MyBlogLog. My friend Brad Feld has been using the service for a long time, and like him I enjoyed analytics that MBL provide daily about your “clicks-out”. Then MyBlogLog has added this automatic creation of reader communities, which I find interesting – any user of MyBlogLog accessing my blog more than a few times is automatically added to my reader community. And it just takes a few minutes to configure the tool and add a piece of JavaScript to your template to get this list of faces having most recently accessed the blog. Last weeek, Eric Marcoullier, MBL’s founding CEO (who has since left the reins of the company to Scott Rafer), has enabled a cool hack: the addition of pictures from readers leaving comments. This feature is very familiar to Flickr or any service that requires a login to leave a comment - but MBL can add this feature to blog running on TypePad or Wordpress. Sort of adding a personal touch to faceless blogging… Note that images are added once the page is fully loaded and therefore it can take a bit of time. Check out MBL's blog here.

And this is post #500. I know that some blogs get there in a few weeks but it took me a couple of years.

The revolution of the blog peasants - or who gives a hoot about the A-listers anyway ?

I am not too fond of blogging about blogging, but I could not help noticing (courtesy of this TechMeme’s thread) that Nick Carr was ranting The Great Unread, in which he complains how tough it is for the loneliness of the mundane blogger (the blog peasants, that’s us) and how they struggle to get attention from A-listers (aka the blogging elite – them). That part of Nick’s piece made me smile (I was attending the conference he is referring to):

The best way, by far, to get a link from an A List blogger is to provide a link to the A List blogger. As the blogosphere has become more rigidly hierarchical, not by design but as a natural consequence of hyperlinking patterns, filtering algorithms, aggregation engines, and subscription and syndication technologies, not to mention human nature, it has turned into a grand system of patronage operated - with the best of intentions, mind you - by a tiny, self-perpetuating elite. A blog-peasant, one of the Great Unread, comes to the wall of the castle to offer a tribute to a royal, and the royal drops a couple of coins of attention into the peasant's little purse. The peasant is happy, and the royal's hold over his position in the castle is a little bit stronger.

Given the growth of the blogosphere, I am not even sure about who A-listers are and what they represent anyway. The original A-listers from 2 years ago (when I started blogging) are largely gone (“sent to the guillotine” ), and it has been a long time since I removed almost all of them from my blogroll, and replace them by people who are meaningful to me. Tools like Technorati, TechMeme, Digg, Wikio, del.icio.us, Google define the new A-list on a much more granular basis – and that’s how it should be.

IMHO good content will find its way to rise to the attention of the people who are meant to be interested in it.

Palo Alto bloggers featured in Palo Alto Weekly

Thanks to Cyrus Hedayati for interviewing me last week about bloggers living in Palo Alto: Living in a bloggers' world. The article also makes a reference to my good friend David Hornik (not Hornick) who has inspired a generation of VC bloggers with VentureBlog.

Pamela Hornik’s Silicon Valley Mom's Blog and  Enoch Choi’s MedMusings are also mentioned. Enoch actually helped me find the PA Weekly article through his post.

Is that the definition of being "mainstream" for a blogger. Being mentioned in your local community newspaper ? Or is it too much self-referencing ?

Oh, about the anecdote: it is actually a true story - except that the entrepreneur just wanted to introduce herself, not pitch me on her business... yet.

Software Only is two years old

What a bizarre way of celebrating the two-year anniversary of this blog: my last post was eleven days ago, and I have not found the time since then to blog or comment on anything – I have been heads down on a couple of projects that I can’t talk about, met a few very interesting stealth companies and have held a number of private meetings. Not much material to blog unfortunately .

Anyway, looking back at the past two years, I have published close to 500 posts, had an average of 2 comments per posts, one trackback and interestingly – for each comment I get, I receive 2 or 3 private emails. It is not surprising since many of the things my readers discuss with me are the confidential kind. Ever since my FeedBurner feed sees all subscribers, the number of subscription has raised to more than 14,000, with Rojo being the most popular RSS reader for my feed – a very unusual case.

I decided a long time ago not to blog about my blogging, but I went through multiple phases, on both the read and the write side:

• Three to four years ago (when I was still a General Partner at a venture firm), I started following a few blogs as bookmarks I would visit every now and then, and then as RSS subscriptions (in Newzcrawler initially). It took me some time to comment.
• The first three months of the blog, following that initial post, were essentially an experiment: finding my style, themes, rhythm, length of posts, etc. What became clear after a while is that what seemed to “work” for my audience was a mix of financing tips and news, comments on the consumer Internet market – both trends, companies and M&As, and every now and then a bit of rants and thoughts. Also very popular are the reports of the numerous events and conferences I have been attending over the past couple of years.
• January 2005 is when I decided to seriously invest in blogging, both reading and writing. This coincided with the decision I made to focus the activities of my firm on investing and helping build early stage consumer Internet services. One of the key drivers of success of any investment firm is the depth, and of course quality, of its deal flow. This blog has been fantastic in that regard, enabling tens if not hundreds of interesting online and offline discussions – a handful leading to some of my 15 startup investments, or involvements, in the past couple of years.
• In 2005 and early 2006, I spent an average of two to three hours a day reading 200 to 300 feeds, commenting, and posting 5 to 7 times a week. I was hooked on Memeorandum (now TechMeme), and really tracked what happened through the blogs. During that phase, I would almost make a point to scan through all my feeds multiple times a day, going through all unread posts as much I could. And I would have difficulties to write short posts – less than 200 to 300 words.
• Then a couple of months ago, around April/May, I decided to be much more selective on my feed reading, switched aggregators to support that, and started spending less than one hour per day reading blogs – using TechMeme and Wikio (I am an investor) to track developing news and conversations, and switched from MyYahoo to Netvibes (I am an advisor) after 7 years to track the blogs that matter to me. At the eBay developer conference, Anil Dash – who had impromptuously joined  our panel – made the comment that he had almost quit reading feeds because “he did not want to spend all this time unbolding headlines”. And I realized I was getting to the same position, as a result of having way too much to read and way too little time.

What’s next for Software Only, and its French little sibling – Sans Accent ? A few more posts before hitting a well deserved break during which I will most likely go quiet. And when I return, more of the same content, with maybe less posts written at 4am . I also hope to overcome that tendency of mine of not posting short summaries or comments when I only have a few minutes – because I never ever have time to come back to these ideas and express them more fully. Sort of a “Blogge Diem” notion.

And of course, I am – as always – interested in your feedback on what works on this blog, what doesn’t, and what else you would like to hear about.

Typepad gets a few useful feature additions

Typepad New Features
Originally uploaded by jeffclavier.

Six Apart just announced a few new additions to TypePad that are worth noting:

• The most important one - by far - was the ability to link your TypePad feeds to your FeedBurner managed feed, which I blogged about upon release. For the first time, bloggers know exactly how many subscribers they have across their numerous feed incarnations – and that is important to their ego .
• I like the ability to feature a post temporarily. This one (related to the World Cup) will be up until Sunday. And then I stop blogging about sports - I swear. It would however be great to somehow mark the post as “Featured” since the current implementation does not make it explicit.
• Finally, the ability to edit multiple posts in one go, like closing comments or trackbacks, is pretty useful.

Next requirement: getting some of the Vox editing features in Typepad, like the picture insert widget, would be great.

Any other favorite feature request of yours ?

Rafat Ali's turn to get micro-publishing venture funded

Very slow posting week ahead, at least until Gnomedex, but I have to congratulate Rafat Ali for his scoring an investment from Alan Patricof and his new firm, Greycroft Partners. PaidContent has been one of the first blogs I have started reading 3 years ago, and I have always appreciated Rafat's unique take on the world of media, old and new. Rafat offered the following comment on the (undisclosed amount of) funding he received:

ContentNext Media, the parent company of our three sites – paidContent.org, MocoNews.net and ContentSutra — has received its first round of investment from Alan Patricof’s new venture firm Greycroft Partners. [...]
Alan, as most of you know, has helped define the venture-capital industry in the U.S., having helped provide early stage financing for companies such as Apple, AOL, New York Magazine, Audible, Cellular Communications, NTL, Office Depot, Harman Intl. and more recently Zinio, Handmark and The Newsmarket. He is a co-founder of Apax Partners, a private investment firm he started in 1969 that has now evolved into one of the largest PE firms with more than $20 billion under management and advice.
Greycroft is his vehicle for going back to his roots: investing in startups at the intersection of techology and media. Alan’s team approached me in January, and when I met him in New York later that month, within 20 minutes of us talking, he instinctively got it … the issues, the challenges, the opportunities … that’s what amazed me. Out of everyone hovering around us (and I really mean everyone), this made the most sense.
Our opportunity is to take some money, organize and solidify, choose the right partners, and expand/accelerate what we’re doing. In the end, keep our heads down and keep doing what we do best: write, report, bring the industry together to discuss and help them do business…in other words, keeping it real.

It is an awesome development for Rafat, Staci Kramer and their colleagues, and I wish them the best in scaling their operation. It is also amusing that Rafat's announcement comes just a week after his close friend Om Malik disclosed his own financing of GigaOmniMedia Inc. The Wall Street Journal Online has more on the story.

[Photo credit: JD Lasica]

Tags: paidcontent