Charles River Ventures' New Fund (and the Twitter Back-Story)

Charles River Ventures just closed a new $320 million fund, its fourteenth. The firm has had some big liquidity events over the past two years, generating about $600 million in returns, including the IPOs of local start-ups Virtusa and Netezza, and acquisitions of EqualLogic, Compete.com, and Acopia Networks.

Among CRV's more recent investments they list in the official press release are Nantero, Scribd, Vlingo, and Twitter.

Curious story about Twitter... CRV only has about $250K in that company, which has raised $55 million in total. CRV had invested in Twitter founder Evan Williams' earlier venture, Odeo, which didn't take off. Williams decided to repay the investors and go off and do Twitter. (The technology for it had been an offshoot of Odeo.) When Twitter started raising funds, Charles River put in that quarter-million early on, but hasn't participated in any rounds since, and doesn't have a board seat. (But Twitter is listed as one of CRV partner George Zachary's investments.)

Also interesting that TechCrunch lists CRV as a Menlo Park firm. While a lot of its activity has been out West, five of the eight investing partners for this new fund are based in Waltham, Mass. (all but Bill Tai, George Zachary and Saar Gur.)

Secrets of the Serial Entrepreneurs

We had a great dinner gathering last night at Henrietta's Table... the discussion was titled "Secrets of the Serial Entrepreneurs," and it was a sort of warm-up to the annual Future Forward conference later this fall.

I asked each of the entrepreneurs to share the best piece of advice they'd ever gotten.

Sonia Khademi of Proxilliant Systems said, "Cash flow positive equals happiness." When you're cash flow positive, or even cash flow neutral, you don't get pressured into doing bad deals.

Don Bulens, most recently CEO of EqualLogic, said, "Don't love something that doesn't love you back." A lot of times salespeople, engineers, or CEOs get too enamored of a deal or a technology or a strategy that just isn't working out -- but they have a hard time letting go.

Hilmi Ozguc, most recently CEO of Maven Networks, said, "Pigs get fat; hogs get slaughtered." What he meant was that a lot of times when start-ups are negotiating to be acquired, they hold out for irrational terms -- and the deal winds up fizzling. Ozguc sold his latest start-up to Yahoo in January for $160 million cash. Just under $30 million went in. And the acquisition didn't require him to stick around for a year...in fact, he mentioned that he left Maven two weeks ago.

Cheng Wu, currently chairman of Azuki Systems, said, "A company is bought -- not sold."

(You can tell that we wound up talking a lot about M&A... Bulens mentioned that his company was getting ready to go public when they got a $1.4 billion all-cash offer from Dell last year. I asked him if there was much debate about what to do, and he said there was. They looked at the market cap of a competitor, Riverbed, that had recently gone public and was doing well. But ultimately the cash in hand was too alluring. Inevitably, that led to some discussions about why New England start-ups seem to sell rather than remaining independent. VCs and entrepreneurs got about equal blame from the folks I spoke with over dinner...)

Vinit Nijhawan offered up a nifty metaphor from the peanut gallery... finding the right business model for a start-up, he said, is like "hunting around for the radio station before you turn up the volume." You don't want to accelerate spending until you know that the business model works.

One nice story that Jay Batson shared.... at last year's pre-Future Forward dinner, people were griping (as usual) about how risk-averse VCs are. But Batson met an investor there from Sigma who ended up funding his company.

Invites for the 2008 Future Forward gathering, coming up on Nov. 19th, just went out by mail. If you're not already on the list, you can request one here. (As an FYI: the audience consists entirely of entrepreneurs, CIOs, CTOs, and investors.)

Big Tech Companies in New England: An Impossible Dream?

Last Sunday's column focuses (again) on New England's penchant for selling start-ups short rather than building what I call "pillar companies."

From the column:

Maybe I'm a glass-half-empty sort. Maybe I refuse to acknowledge the reality of the financial markets, and the need for entrepreneurs to deliver a return for their investors within a reasonable time.

But I can't help feeling that, whenever a New England company is sold to an out-of-state acquirer for big bucks, we've missed another chance to build a "pillar" company of our own.

When Dell Inc. pays $1.4 billion in cash for New Hampshire's EqualLogic Inc. this year after the storage start-up had filed to go public, it feels as if we've missed the opportunity to cultivate another EMC Corp. in our backyard. When VeriSign Inc. buys m-Qube Inc., one of the pioneers of content delivery to cellphones, for $250 million, that's a potentially significant anchor tenant we've lost for the mobile software com munity here. When Microsoft Corp. buys Softricity Inc., that's a pioneer in application virtualization - delivering software over a network connection - no longer seen as a leading player in the field, and headquartered right here in Boston to boot.

The column includes a chart of some recent acquisitions by out-of-state buyers, and also a video from the recent Y Combinator "Demo Day," where fledgling start-ups show their stuff.

Did EMC Drop Out of the Bidding for EqualLogic?

Dell is paying $1.4 billion in cash for Nashua, NH-based EqualLogic. Company is run by Lotus alum Don Bulens, and backed by Charles River Ventures, Sigma Partners, Focus Ventures, and TD Capital. This is a big exit for all involved, since only about $52 million had been invested in EqualLogic. (Earlier this year, Bulens had touted the company as an IPO prospect.)

I had lunch today with a storage industry entrepreneur who suggested that EMC had likely been in the bidding, but dropped out before the price reached $1.4 billion. He also speculated that this could mean the end of EMC's partnership with Dell; Dell's reseller arrangement with EMC accounts for about 16 percent of EMC's storage revenue. The official word from EMC is that there will be no changes to the Dell partnerhship.

Goldman Sachs just downgraded EMC from a "Buy" to "Neutral."

EMC chief executive Joe Tucci gave this interview in October in which he vowed to catch up to the competition by early 2008. Which is coming soon.