IDG Venture’s Latest Partner Is No Small Soldier –

Charles “Chip” Hazard has the honor of being the only venture capitalist with his own action figure. Never mind that it’s based on a cartoon character from the forgettable movie “Small Soldiers” or that the 34-year-old VC doesn’t have a crew cut or wear fatigues to work. Hazard stands alone with this peculiar glory. If that weren’t enough, he has the cojones of an action hero: He didn’t balk at being the first GP to leave Greylock to pursue a new adventure in the private equity jungle.

Greylock, based in Waltham, Mass., is widely known for building up technology companies and providing generous returns to its limited partners. Within industry circles, it has a reputation for launching investment careers and for the continued service of those brought into the fold. Coming into 2002, no one promoted to the position of general partner at Greylock had ever left for another investment house since the firm’s founding in 1965.

The average VC might worry about getting jinxed by breaking a 37-year streak, but why have a name like Hazard if you’re not willing to take a risk?

Hazard broke the streak in April to help launch a new Boston office for IDG Ventures. While the move struck some as a breakdown of transitional planning at Greylock, Hazard’s departure was more the result of eight years spent on the periphery of successful startups like Narrative Communications and Internet Business Advantages.

“During my time at Greylock I learned so much, including that the most fun part of the venture business is taking companies from three people and an idea and turning it into something with a built product and a culture and a team of 30 to 50 people,” Hazard explains. “That’s the creative process … which I’ve participated in, but as a director and an investor. What ultimately happened was that [IDG Ventures] presented me with a very attractive chance to build something more from the inside.”

Go East, Young Man

Hazard’s interest in building businesses was originally piqued in 1991 when he and his wife left the San Francisco office of Bain & Co. to help privatize state-run companies in Poland for Company Assistance Ltd. “We were primarily working with the Ministry of Privatization and consulting enterprises as they were trying to transform for a new world,” says Hazard, who spent three months in Poland while an undergrad at Stanford University.

Near the end of his yearlong stay in Poland, Hazard and his group began dabbling in private equity. It was his first taste of the venture capital world, and he was intrigued. Shortly after enrolling at Harvard Business School the following fall, Hazard asked a friend to put him in touch with Howard Cox, general partner at Greylock. Apparently, they both liked what they saw. Meetings with Greylock continued throughout the next year, culminating in an offer to Hazard to join the firm as an associate.

“As I was reviewing the offer, I asked Doug MacKenzie at Kleiner Perkins for his advice,” Hazard remembers. “He told me that an offer from Greylock was the single best offer I could get in the venture capital industry.”

When he joined in 1994, Hazard was the only associate working with six partners. He says that he didn’t have a designated mentor, but that he worked most closely with Howard Cox and Henry McCance during his first year getting his VC chops.

Hats Off

By the time he became a partner, Hazard was an integral part of Greylock’s software practice. His Greylock investment portfolio featured three M&As, including embattled ArsDigita Corp. to Red Hat Software, plus a 1996 IPO for employment solutions provider The Vincam Group.

Like most venture capitalists in the late 1990s, however, Hazard was not without his share of smoking craters. The biggest was a 1999 decision to buy into online wine retailer The company eventually secured a total of $52 million in venture funding from Greylock, Benchmark Capital, Charles River Ventures, Highland Capital Partners and Tudor Investments, but it closed up shop in 2001 and sold its domain name.

The process by which Hazard would leave Greylock technically began last November when IDG Ventures decided to expand its global investment reach by opening a Boston office. The corporate investment group which does not participate in strategic deals for its parent company hired Michael Greeley to launch the new shop.

Greeley had previously been an investor with Polaris Venture Partners, which was housed less than a mile away from Greylock on Winter Street in Waltham, Mass. He was also a longtime friend of Hazard’s, having known him from their days together at Harvard. After settling into his new role, Greeley approached Hazard to gauge his interest in joining IDG Ventures’ Boston office as its second general partner.

“My wife and I had known Chip and his wife for almost 10 years, but we still had a number of conversations about our vision for [IDG Ventures] before we decided he should come aboard,” Greeley says.

Different Proposition

For Hazard, the opportunity was simply too good to pass up. Rather than participate in a generational transition at a firm with nine partners and more than three decades of history, he would be one of two partners building something new.

“I’m now able to bring all of the training and expertise I had at Greylock, plus the resources and leverage of a $3 billion company with operations in 85 countries,” Hazard says. “It’s a different proposition than Greylock was, but I think it’s something people will respond well to.”

IDG Ventures is based in Menlo Park, Calif., and has satellite offices all over the world. Each office makes independent investment decisions while making sure it doesn’t step on the toes of others. The group’s sole limited partner is media company International Data Group (IDG).

Many Happy Returns

“We see a fair amount of deal flow from people saying they’d like to start a publishing company and thought IDG would be an appropriate investor, but we have to explain that we’re not a corporate venture firm in that sense,” Hazard says. “Our objective is to invest in great companies and generate great returns.”

To that end, Hazard is maintaining his enterprise software focus. He has not made an investment yet for IDG, although he is eyeing several possibilities. In addition, he has worked out an agreement with Greylock whereby he maintains five of his board seats. Hazard says he doesn’t expect any of those companies to need additional financing in the short term, but he acknowledges he would take himself out of the decision-making process if IDG Ventures became interested in follow-on financings for those particular companies.

The Boston branch of IDG Ventures has been capitalized with approximately $100 million. Located next to Exeter Street in downtown Boston, it gives Hazard the opportunity to dine outside of a sterile office park cafeteria that was his only choice at Greylock. It also gives him a chance to see more of his mother, who lives in an apartment tower just across the street. “She’s only come by once,” Hazard laughs. “So far.”

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