Both Draper V, a $180 million fund, and Draper VI, which raised $375 million, are full of businesses with an online angle. Four companies in Fund V are already out of business. Draper VI has its share of firms from the Internet bubble, including Club Mom, a content site for mothers; Amazing Media, a banner ad technology firm; and Product Pop, an Internet-marketing services company.
Draper did hit it big recently. Cyras Systems, a fiber-optics firm in Fund V, was acquired in March for $1.15 billion in Ciena stock. That's a significant score - but it's questionable whether Draper's take will be enough to balance out the other dogs in the fund.
Redpoint is a venture capital supergroup, with partners who defected from Institutional Venture Partners and Brentwood Venture Capital. But the firm's first fund, which raised $600 million, so far has been short on successes.
The six partners at Redpoint took just 14 months to invest in 40 startups, most of them Internet-related. There was an $8 million investment in BizBuyer.com, a b-to-b company that closed shop last year, and $22 million in NexGenix, one of many companies created to build e-commerce sites. Other investments include $3 million in an online beauty site, $4 million in an e-commerce company called eNet China and $6 million in a sci-fi Web site that shut down operations in April. A year ago, NexGenix filed to go public - Redpoint's first chance to cash out and distribute the proceeds to its limited partners - then pulled the offering in May. Four months later, NexGenix laid off an unspecified number of employees.
Redpoint's two saving graces were that it set aside about half its fund to keep its startups going and that it invested outside the dot-com realm. Yang figures roughly 70 percent of Redpoint's first fund is invested in infrastructure and software firms, though many were e-commerce companies that have shifted their focus hoping to stay alive. "At least we don't have 70 percent of the fund in e-retailing," he says.
Fate has been a little less kind to Softbank Venture Capital. The $600 million Fund V invested in 48 startups in approximately 12 months, including companies such as Buy.com, eCoverage, eOffering.com, Perfect.com and Rentals.com. The portfolio also includes iChristian, an online religious bookstore, More.com and Urban Media Communications, all of which have gone out of business; BizBlast, a company that hoped to help small businesses get on the Web but ended up laying off more than half its staff last fall; and iPrint.com, which went public just prior to the spring 2000 crash and traded last week at less than 50 cents a share.
According to Lisson, Softbank V has already parceled out all of the fund's money yet has distributed no money to investors. Softbank VCs admit the fund overindulged in vulnerable sectors.
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Correction: An earlier version of this article should have stated that Benchmark Capital's third venture fund has invested in a software company, Collabra. Also, due to an editing error, the story should have stated that Benchmark III has no investments in networking equipment, and that the $10 million loss the fund faced on an investment in 1-800-Flowers was as of Sept. 30, 2000. Additionally, the story incorrectly stated that Tim Draper is an investor in Red Herring. |
