Monday, November 26, 2007

avc: Sequoia Capital and everyone else

"This weekend I became a fan of Sequioa Capital on Facebook. They only have 14 fans, so if you are a fan like me go join their page.
Why am I a fan of Sequoia? Because they are simply the best venture capital firm in the business right now. They are doing it right. And it's impressive to watch.
On that subject, I wrote a post on the Union Square Ventures weblog this morning talking about why the best firms in the venture capital business have an advantage over everyone else. If you invest in venture capital funds or take money from them, it's worth reading and commenting on."

"If you look at the most successful venture capital firms, you will see that they are usually early stage investors who often are the first institutional money into an investment, the way Kleiner and Sequoia were in Google. Getting that place in the capital structure in an early stage investment is important because it provides access to the management and business that later round investors don't get. Look at the role Accel now has at Facebook. They are involved deeply in the strategic and business decisions that the management of Facebook makes. What comes with that kind of access is a level of knowledge and understanding about an emerging market that you just cannot get sitting on the outside looking in.
The best venture capital investors/firms use their engagement with their portfolio companies and all the entrepreneurs they meet to become smarter about the markets they invest in. Kleiner and Sequoia certainly got to see the search marketing business developing before most other investors did. Accel (and Greylock and Peter Thiel) will certainly understand how social advertising is developing better than most of us on the outside. These insights are incredibly valuable and should lead to a host of additional investments."

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