Venture capital is private equity invested primarily in startups and small businesses that have demonstrated long-term growth potential. Venture capitalists, whether investor or firm, plays a significant role in the startup ecosystem.
A startup requires funding to scale up, and venture capital is one source of funding. However, the number of investors willing to invest their trust and resources into a new business or small company has always been an issue. Even banks consider these businesses risky to lend money to. However, VC investors and firms with a strong conviction about a startup invest heavily and get outsized returns on their investments.
The article will tell you about the top 17 venture capitalist investors and firms you should know and what you can learn from the leading venture capital startups in the world.
Top Venture Capitalist Investors
Alfred Lin has held various positions in different companies. Lin worked at Zappos.com as the COO, CFO, and chairman. At LinkExchange, he served as the Vice President of Finance and joined Tellme Networks as the Vice president of Finance and Business Development. Zappos and Tellme Networks were both procured by Microsoft.
Lin is an American investor at Sequoia Capital.
Bill Curley is rated among top technology dealmakers and appears on the Forbes Midas List. He was a partner at Hummer Winblad Venture partners before joining Silicon Valley investment firm, Benchmark in 1999 as a general partner.
Bill has research analyst experience and was regarded as a Wall Street premier technology analyst. This helped him serve as an Amazon.com IPO lead analyst and secure organizations such as Compaq, Dell, and Microsoft.
Jeff Jordan began his career at The Walt Disney Company and Hollywood Entertainment, where he held various executive jobs. He joined eBay North America as senior VP and General manager, where he drove the acquisition of Half.com and PayPal by eBay.
He joined PayPal as a president between 2004 and 2006. He later became the President and CEO of OpenTable before joining Andreessen Horowitz as a venture capitalist.
Joshua Kopelman is positioned among the 20 VC globally. He is the founder of First Round Capital, a seed-stage venture firm that spearheaded the seed round in Uber. Prior to First Round Capital, he founded Half.com that he sold to eBay in 2000.
Lee Jared Fixel
Lee Jared Fixel is the force behind Spotify, Peleton, and Stripe. In March, this American VC and financial specialist joined Tiger Global, where he has been investing resources in internet and programming organizations in emerging markets.
He invested in Flipkart, which Walmart later bought, and he serves as its board of directors since 2018.
Until 2008 Matter Cohler worked as Facebook’s Vice President of Production Management and is the current general partner at Benchmark. He played a key role in the acquisition of Instagram by Facebook in 2012. In 2015 Forbes listed Matt in its America’s 40 Richest Entrepreneurs Under 40 and its 2012 Midas List of top technology investors.
Mary Meeker worked with Morgan Stanley for nearly 20 years. In 2010 Mary joined venture funding firm Kleiner Perkins Caufield and Byers as a partner. Forbes listed her as the 77th most powerful lady on the planet.
Mary and other venture capitalists from Kleiner Perkins left to launch another venture firm, Bond, in mid-2019.
Mike Volpi began his career at Hewlett Packard, working in the marketing and engineering departments. He joined Cisco after completing his MBA, where he held different executive positions. He became Entrepreneur in Residence at Sequoia Capital in 2007, and together with Danny Rimer, they co-founded Index Venture in 2009.
Early in his career, Neil (Nanpeng) Shen worked with firms such as Citibank, Deutsche Bank, Lehman Brothers, and investment banks in New York and Hong Kong. However, he resigned from full-time employment to start a travel company Ctrip.com in 1999. He also co-founded Home Inns, a hotel network, and today Neil is the founding managing partner of Sequoia Capital China.
In 2008 Sameer Gandhi joined Accel, where he focused on consumer, software, and services organizations. As a result, he drove Accel’s investments in CrowdStrike, DJI, Plex, Dropbox (DBX), Raise, Spotify (SPOT), Yapstone, Rylo, and World View. Other companies were Bonobos and Jet procured by Walmart, Venmo procured by PayPal/Braintree, Diapers.com procured by Amazon, and Dropcam procured by Google.
Before Accel, he partnered with Sequoia Capital, where he drove investments in companies such as Dropbox, Barracuda Networks, Trulia, Gracenote, and Sourcefire.
Top Venture Capitalist Firms
Investment to Exit Ratio is one of the top performance measures to use on VC firms. If the ratio is 1, the VC firm makes a single investment for each exit or no growth. Above 1 shows that it is a net acquirer of growth scenario or portfolio companies. Therefore a startup or small company should look for a higher ratio.
The following are some of the best Venture Capital firms with a higher Investment to Exit Ratio.
This is a corporate VC arm of Intel Corporation established in 1991. It has been investing in tech firms in Western Europe, the US, and China. Its primary focus is areas such as software security, 5G & communications, Artificial Intelligence (AI), NextGen Compute, IoT & Robotics, and more.
Intel Capital has over 1.300 investments and exited in companies such as Schoology, Animoca Brands, and MongoDB.
Intel has an Investment to Exit Ratio of 28.5% and an 83% success rate when the firm acts as the lead investor.
The silicon-based VC firm was established in 1974 and has offices in Boston, Israel, and India. Bessemer Venture has nearly 910 investments and successfully exited in 197.
The steel industry was its primary focus when it began, but it has diversified to consumer, enterprise, and healthcare industries. It has successfully exited from Shopify, Dynamic Yield (AI communication), and Twilio.
Bessemer Venture has an Investment to Exit Ratio of 21.65% and only led 34% of its entire investment portfolio.
The VC firm was founded in 1972 and initially invested in software and hardware companies. However, Kleiner Perkins has diversified its portfolio to industries such as biotechnology, healthcare, enterprise software, internet, and mobile.
Another change is that the firm switched from investing in companies in their late-stage growth to startups in their early stage as well. To date, Kleiner has made 1,100 investments, out of which 240 have reached the IPO stage. It has exited successfully from Uber, Twitter, Beyond Meat, and Peloton, among others.
Kleiner Perkins has an Investment to Exit Ratio of 21.13% and a 79% success rate when the firm acts as the lead investor.
The Maryland-based VC firm was founded in 1977 and has offices in India, China, Boston, Baltimore, San Francisco, and New York. Its primary focus is the technology and healthcare industry, where it has been investing from seed to IPO stages.
NEA has made over 1600 investments, out of which 333 are successful exits. Some of these are Onshape, Workday, Uber, and more.
NEA has an Investment to Exit Ratio of 20.96% and 57.41% success rate when the firm acts as the lead investor
The VC firm was founded in 1983 and has offices in India, China, London, and California. Accel invests in the early and growth stages of mobile technologies, the internet, consumer software, and enterprise software companies. To date, Accel has accumulated 1,350 investments and has exited out of 280 successfully.
Some of these successful investments are CrowdStrike, Facebook, Animoca brands, and more. Accel has an Investment to Exit Ratio of 20.77% and a 55.56% success rate when the firm acts as the lead investor.
The venture capital firm was founded in 1972. Its primary focus is mobile, internet, energy, financial, and healthcare companies’ early to late-growth stages.
Sequoia has 1.275 investments, with 365 of them being successful exists. Some of its exits are ServiceNow, Instagram, and NVIDIA, among others.
Sequoia Capital has an Investment to Exit Ratio of 20.71% and a 63% success rate when the firm acts as the lead investor.
Vinod Khosla founded Khosla Ventures in 2004 and has nearly 700 investments, out of which 96 have reached the IPO stage. Its primary focus area is the software industry in China and the US. Big Switch Networks, Okta, and Square, are some of its profitable exits.
Khosla Ventures has an Investment to Exit Ratio of 13.8%
What Startup Founders can Learn from 5 Best VC
The Pareto principle is used when determining VC returns. That is, 80% of VC wins are derived from only 20% of deals. In view of that, venture capitalist investors and firms invest in startups and small businesses, knowing that along the way, they will have to accept a lot of loss to hit the wins.
The following are some of the biggest VC investments that you can learn from.
The acquisition of WhatsApp by Facebook in 2014 at $22B was the largest private acquisition. Sequoia Capital was the only venture investor in WhatsApp by then, and its acquisition by Facebook turned the VC’s investment from $60M to $3B.
Sequoia and WhatsApp had a different strategy; thus, instead of bringing in additional investors to validate their investment, the VC was the sole investor. It was convinced that WhatsApp had a bright future, so the VC firm invested its funds and got a larger share of ownership, thus the high returns.
Facebook had a $168 IPO. Accel Partners and Breyer Capital were its early investors before other VC began flocking. In 2010, Accel sold shares worth $500M and had $9B in 2012 when Facebook went public. Accel was confident of Facebook’s future, and today the social media platform has over 2B active users, and its early exponential growth was also impressive.
Alibaba IPO was the biggest on record for it sold stocks worth $22B. In 2000, SoftBank got 34% stack of Alibaba after investing $20M. When Softbank’s founder, Masayoshi Son, invested, the company was a pre-revenue and pre-business model. However, he knew the internet would soon transform China as it did with the US and Japan.
Thus he picked Jack Ma, a Chinese internet entrepreneur, and invested in his company. Alibaba’s IPO gave it a market cap of $231B, and SoftBank’s stake was valued above $60B. Alibaba’s success signaled a huge market potential, and today many entrepreneurs are fighting to get a piece of the pie.
The file-sharing startup had its $12.78B IPO in March 2018, making it the most valuable tech company globally.
Sequoia Capital made a $2B return on its investment from Dropbox at the time of exit. The lesson founders can get from this investment is that they should have a promising startup in their court in order to reap outsized rewards.
Like WhatsApp, Sequoia kept other investors out of Dropbox by locking in some substantial amount of shares. Other investors who joined the startup late found a smaller piece of the pie.
Creandum, a small VC firm based in Sweden, invested $4.5 M and got approximately a 6% stake in Spotify. The Stockholm-based Spotify rocketed from a mere unknown startup to a global on-demand music streaming service.
At the time when Creandum was investing in Spotify, many investors viewed the music industry as a risky venture, or it had meager returns. However, when Spotify developed its mobile app, it partnered with Nokia, its functionality was flawless, and investors began walking to it.
The Creandum got $370M when at the time of exit, and now Spotify is Europe’s most valuable startup.
Venture Capitalist investors and firms are an excellent source of capital for startups and small businesses. Companies such as WhatsApp, Facebook, Alibaba, Dropbox, Spotify, and more benefited from VC investments.
On the other hand, VC investors and firms have made outsized returns on investments when they invest at the early stages of startups. Some have locked out other investors, thus getting a large stack in these startups and a huge return when they exit.
Thus VCs conduct a lot of research before investing their funds, are committed to following through, and have a strong conviction.
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