Promod Haque is definitely not slowing down, David Chao is high on China prospects and Venky Ganesan admits the venture community has hurt itself by not doing a better job recruiting and promoting women.
Those were some of the takeaways from PartnerConnect West, which included VCJ‘s annual West Coast conference, Venture Alpha, at the Hotel Nikko in San Francisco Sept. 27-28.
Haque, senior managing partner at Norwest Venture Partners, was this year’s recipient of our Lifetime Achievement Award, following past winners Alan Patricof and Jim Breyer.
But that doesn’t mean Haque is done investing. On the contrary. In Haque’s more than 25 years at the firm, he has invested in more than 70 companies, 25 of those have gone public and 39 of his deals have been acquired or have gone public and then been acquired. Examples include the IPO of cyber security company FireEyeand the acquisition of Skybox Imaging by Google for $500 million
Just in the last month, he has seen two exits, as Google bought Apigee and Oracle purchased Palerra. Haque led the Series A rounds for Norwest in both Apigee and Palerra.
As he reflected on how venture capital has changed in recent years in an on-stage interview, Haque noted that portfolio companies are taking longer to exit, more than a decade in some cases. Haque, in part, blamed a picky IPO market that snubs its nose at companies generating less than $75 million to $80 million in revenue. He said Norwest, which has raised three consecutive $1.2 billion funds, has responded with “three axes of diversification.”
One of these entails investing at a later stage, including Series C venture rounds, growth equity financings and even outright buyouts. Such deals often have shorter hold periods. As an example, Haque pointed to the 3x return the firm generated in 2014 just two years after making a Series C bet in Skybox Imaging.
“That helps balance out your IRR, and also takes care of the J-curve, because it flattens it out,” said Haque.
In a separate on-stage interview, Chao, co-founder and general partner at DCM Ventures, noted how there is less me-too companies in China. He admitted there are still many copycat companies in China that are patterned after U.S. startups, but the number of innovative startups is rising there. The firm was a backer of China Online Education Group, operator of online English language education company 51Talk, which completed an IPO on a U.S. exchange this year.
DCM, which splits its investments in half in China and the United States, also is an investor in the hot app Musical.ly, which young teens use to create short music videos. The company started in China and now has a large San Francisco presence.
Chao said he prefers to invest in companies that other VCs tend not to go in, and he pointed to Eaze, medical marijuana delivery company that he described as “Uber for weed.”
In a separate keynote interview, Ganesan, managing director, Menlo Ventures and chairman of the National Venture Capital Association, talked about the “bro culture” of Silicon Valley and the role of VCs when CEOs behave badly.
In regards to women venture capitalists, he noted research varies on how many women GPs there are, but he noted regardless of the exact percentage, “it is terrible and not acceptable. Not in 2016.”
Ganesan said the industry has only hurt itself by not doing a better job recruiting and promoting women, missing out on opportunities, especially in consumer products, that a different perspective might have appreciated.
Ganesan shared his own experience passing on the chance to back Pinterest early in its life.
“I didn’t understand how a very big part of our economy works,” he said.
“We’ve got to fix it,” said Ganesan of the industry’s lack of women partners. “And we will fix it. It just takes time.”
David Toll contributed to this report
Photo of Venky Ganesan by VCJ staff