Three is an important number. There’s a rule of three in business, which says that in any industry, after competition, three companies remain. Or, three can be a crowd. Or, good or bad news items arrive in threes. Whatever your beliefs or superstitions, three is a number of interest, and in 2013, to me there are three (3) significant “early-ish” venture capital deals: Snapchat, Uber, and AngelList. This isn’t to diminish the hundreds of awesome deals out there, but for the reasons I’ve listed below, here’s why I personally came to this conclusion. Again, these are my biases, some of these may not turn out to be significant in the long-term (who knows?), and I’m sure people will disagree. I’d love to know your thoughts in the comments, good or bad.
- Snapchat: Oh goodness, where to begin? Snapchat is fascinating to me on so many levels, and went quickly from a competitive Series A last year to an even more competitive Series B in 2013. The fact that its growth exploded on the back of SMS, that it never touched the web or social networks for virality — it’s remarkable. The consumer brand created by Snapchat seems to encapsulate, the office on Venice Beach, turning pictures into a communication medium. And with growth like this, the attention it grabs and commands from users, it’s hard to imagine them not locking-in their audience and then experimenting with all sorts of business models not just around photos, but other media, as well. Ultimately, it made my Top 3 Deals for 2013 because of its brand and scale, which reflects larger themes: tectonic shift to mobile, lack of dependence on traditional social networks for growth, and a cultural rejection of the largest social network, Facebook.
- Uber: Uber quickly became a consumer brand “verb,” and inspires founders to build “Ubers for X.” From 2010 to 2013, it finally got to Series C, a round led by Google Ventures in a very fascinating deal. Larry and Sergey are personal investors in Tesla, Elon Musk is hiring autonomous driving engineers, Uber is making money (globally), executing on UberX (and riding the ridesharing wave), and so on and so on. Lots of momentum and trends behind this company, no doubt, and led by a strong CEO, strong executives, and blue chip investors — not to mention free cash flows that may enable it to make interesting acquisitions for global expansion or to pick up technologies. People around here are already expecting self-driving vehicles to be part of the future, with companies like Google and Uber leading the way.
- AngelList: Dan Primack breaks the news today that Atlas and Google Ventures led a $24M investment into Naval and Nivi’s platform, valuing it at $150M, plus smaller investments from many investment stakeholders so as to not to appear biased to any institution. The statistics aside, it’s clear AngelList is in a very strong position — it is a product that can scale, not just a service for private investment. Many investors I’ve talked to (including institutional ones) are very bullish on AngelList and would like to experiment with the platform, so we should expect some of that (assuming doing so doesn’t violate any LP agreements). That said, not everyone on the investment side believes in the longevity of the vision, either because of government controls around solicitation, or wondering if there are any adverse selection issues that arise. That debate — which is fair — only leads me to believe AngelList itself is disruptive by nature and could help further shake the foundation of the venture model. For me, I’m long AngelList and I’m long on Naval — his stewardship is something I would never bet against.
Other thoughts and questions on my mind:
- What’s The Most Significant Enterprise Deal Of 2013?: I track these deals but don’t have a good handle on what folks who work in this industry feel were the most significant venture deals of the year. I’d love to know, if you have an opinion. Please let me know.
- Google Ventures Is Strong: This firm, investing Google’s money, is doing very nontraditional investments. I’ve heard rumors that Larry wants the firm to deploy even more money! Who knows…Some of these investments may be based on pure investment merit, some may be strategic to the parent, and some may be both. Only time will tell, but no doubt Google’s investments in Uber (where Larry and Sergey are also personal investors in Tesla) and AngelList could be both strategic and reward the LP (Larry Page, and co) in the long run. Google is hitting on all cylinders and one cannot deny the bold moves being made by its venture arm.
- What’s Next On The Docket? Can another deal in 2013 jump into the Top 3 most significant? Or, if we look to next year, what’s next? Exciting times ahead!