Brandless:  Disrupting Everything in Consumer Packaged Goods

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“Make it simple, but significant.”  – Don Draper, Mad Men, 2010 I am excited to announce our recent investment in Brandless, a bold new consumer packaged goods (CPG) company that officially launched today.  Brandless’ mission is simple but significant: offer health-conscious products at a disruptively low price point that can’t easily be replicated by established CPG conglomerates.  Over the past several decades, consumers have grown to believe that high quality, responsibly-sourced products (such as organic or chemical-free food) should cost more than lesser counterparts sold under national brands.  Brandless aims to challenge this way of thinking, and in doing so change the way we shop for everyday items.  
The CPG industry is a $775 Billion market that reaches every American household—from the kitchen counter, to the pantry and beyond.  Decades ago this industry could introduce low-cost, high-margin products to the world through television ad campaigns and national wholesale Continue reading "Brandless:  Disrupting Everything in Consumer Packaged Goods"

Doing our (small) part to invest in gender diversity

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Good in depth look by Bloomberg at gender diversity in venture capital investments.  I am proud that NEA has invested in the most women-founded companies in the industry.  There is still much work to be done across the tech sector to bring more awareness to both conscious and unconscious bias, and we all must do our small part to move us forward.   https://www.bloomberg.com/news/articles/2017-05-31/at-top-vc-firms-more-women-partners-doesn-t-mean-more-women-funded

The Players’ Tribune:  Why Authenticity Matters in Media

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Today we are excited to announce a $40 M financing for The Players’ Tribune, a sports media company founded by Derek Jeter in 2014.
Derek’s vision was to create a media company that focused uniquely on the needs of athletes and fans, and he recruited an amazing group of athletes and entrepreneurs to his All-Star team.  It has been an amazing experience watching our company grow from a small blog to THE trusted media platform for the athlete community, and we are thrilled to have IVP and Google as investors in our latest round. In a world that is flooded with clickbait and fake news, The Players’ Tribune has differentiated itself by focusing on original, high quality, highly engaging content.  We break critical news and celebrate human achievement through sports, but more importantly we tell the stories that are left untold by traditional media outlets.  I am perhaps most proud
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FusionOps:  Transforming the Global Supply Chain for the On-Demand World

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We are excited to be a part of the $25 M financing announced today for FusionOps, who has rapidly grown to become the world’s leading supply chain intelligence cloud.  NEA was privileged to invest in the company two years ago and has watched FusionOps grow its customers, revenues, and usage by over 400% since that time.  Their unique solution combines industry-specific supply chain expertise with today’s modern cloud and big data analytics, making traditionally opaque supply chain information visible and actionable.  Working across verticals such as healthcare, technology, consumer packaged goods, and energy, FusionOps has made it possible for even the largest manufacturers to create the agility and speed required in today’s fast-paced, on-demand world.
Over the past several years we have watched waves of innovation crash upon the incumbents of traditional industries— since 2000, only 52% of the Fortune 500 have survived and the pace of disruption is accelerating. Continue reading "FusionOps:  Transforming the Global Supply Chain for the On-Demand World"

HackerOne:  Cybersecurity is War, and We Need a New Army

“The definition of insanity is doing the same thing over and over, and expecting a different result”  – Albert Einstein, 1951 “It may sound crazy to try this.  But it is also irresponsible not to…” – Bill Gurley, 2015 I am excited to announce our investment in HackerOne, the leading cybersecurity marketplace which connects enterprises and governments to responsible and ethical hackers.  Many of the largest Internet companies such as Facebook, Google, and Microsoft learned years ago that in order to protect their sites against attacks, they needed more than firewalls, vulnerability scanners, and security consultants.  They needed an army – and they quietly enlisted tens of thousands of developers around the world to openly hack them.   The results were astounding – at Facebook alone, public hackers reported more bugs in 48 hours than had previously been discovered by their internal team throughout the entire previous year. After paying Continue reading "HackerOne:  Cybersecurity is War, and We Need a New Army"

Why Derek Jeter is hitting a Home Run as an Entrepreneur

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“I love it when people doubt me. It makes me work harder to prove them wrong.”  – Derek Jeter, 2015 I am excited to announce our investment in The Players’ Tribune, an innovative new media company founded by Derek Jeter.  NEA has a longstanding history of working with accomplished entrepreneurs, but few with a career as celebrated as Derek’s, which includes 5 World Series titles and 14 All-Star appearances.  Derek is known not only for his commitment to excellence and incredible work ethic, but also for his humility and integrity both on and off the field.  Upon retirement from baseball, Derek has found a new mission in The Players’ Tribune, and hopes to ultimately transform and re-invent the way that athletes connect with fans.  In a very short period of time he has attracted over 100 of the most influential athletes to participate, and has recruited Continue reading "Why Derek Jeter is hitting a Home Run as an Entrepreneur"

FusionOps:   Moving the Modern Supply Chain to the Cloud

Work It Harder. Make It Better. Do It Faster…  (Daft Punk, 2001)

We are excited to announce our investment in FusionOps, the leader in cloud-based supply chain analytics.  Over the past several years we have watchedwaves of innovation crash upon the incumbents of traditional industries— since2000, only 52% of the Fortune 500 have survived and the pace of disruption isaccelerating.  Apple has not only become the largest mobile phone, tablet, and PC manufacturer, but it has quietly become a force in televisions, watches, and cars.  Google, once known for the simplicity of its search product, now makes glasses, thermostats, and smoke detectors.  The world is moving faster and the message is clear in corporate boardrooms— embrace rapid innovation, adapt your products, move quickly, or die.    

For large enterprises, embracing innovation requires not just new ideas and SKUs, but also the capacity to bring them to market and fulfill them “just in time”.  Apple releases products multiple times a year with amazing precision, requiring the orchestration of over 750 major suppliers on 6 continents around the world.  Meeting the challenge of managing a modern supply chain, for ANY organization, requires real-time analysis of customer orders, tracking of complex and diverse pools of inventory, and up to date knowledge of supplier availability around the world.  Today, much of this information lives across data silos in traditional systems, making it extremely difficult for any large enterprise to dynamically assess their production stock, deliver products on schedule, or respond to customer needs with agility.  FusionOps provides a simple cloud solution that provides a comprehensive and actionable view of an organization’s supply chain— enabling the largest companies in the world to make (and fulfill) products faster than ever before.  

Supply chain software is a ~$16 billion market and one of the few remaining categories of legacy client-server software that has yet to move to the cloud.  FusionOps is a pioneer in this exploding sector, having early on embraced cloud computing and advanced “big data” tools such as Hadoop and Spark to deliver amazing results across a number of large enterprises in retail, technology, healthcare, and energy.  Over the past 15 years, NEA has been privileged to watch two of the largest areas of legacy IT move to the cloud through our investments in Salesforce.com (CRM) and Workday (HR / Finance), and are excited to partner with FusionOps in the next major wave of cloud disruption.  

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Do your VCs have an uncomfortably high burn rate?

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* This blog is a follow-up to Fortune’s Dan Primack and his post:  The startup world’s other ‘cash burn’ problem” where he suggests that venture capitalists, by and large, have a burn rate problem. 

Over the past several weeks, much attention has been placed on unquestionably high start-up burn rates and whether entrepreneurs should change their current operating models in the face of a potential downturn.   But an equally important question for entrepreneurs is whether the VC industry, and specifically the firms that have invested in YOUR start-up, have an uncomfortably high burn rate.  Have we invested too quickly in other start-ups and have alarmingly low cash reserves?  Have we prepared for a downturn? 

For many entrepreneurs, the idea that a VC firm could run out of money feels highly unlikely.  But VC firms have their own “burn rate”—they do not have unlimited

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Do your VCs have an uncomfortably high burn rate?

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* This blog is a follow-up to Fortune’s Dan Primack and his post:  The startup world’s other ‘cash burn’ problem” where he suggests that venture capitalists, by and large, have a burn rate problem. 

Over the past several weeks, much attention has been placed on unquestionably high start-up burn rates and whether entrepreneurs should change their current operating models in the face of a potential downturn.   But an equally important question for entrepreneurs is whether the VC industry, and specifically the firms that have invested in YOUR start-up, have an uncomfortably high burn rate.  Have we invested too quickly in other start-ups and have alarmingly low cash reserves?  Have we prepared for a downturn? 

For many entrepreneurs, the idea that a VC firm could run out of money feels highly unlikely.  But VC firms have their own “burn rate”—they do not have unlimited capital and must manage their investable cash between new investments and reserves for follow-on investments.  The rule of thumb is that VC firms should reserve about $1 for every $1 invested in a portfolio company.  In good times, when capital from a variety of sources including hedge funds, mutual funds, and wealthy individuals chases after start-ups, VC firms tend to reserve a little less as they can rely on alternative sources of funding.  When the cycle turns, these alternative sources tend to exit the industry, leaving only “traditional” VCs who have the appetite, conviction, and CAPACITY to continue investing.  VC fund reserves enable the industry to fund its best companies during tough times; within NEA’s own portfolio, some of our biggest wins—companies like Groupon, Opower, Tableau Software, and Workday were supported through some of the darkest days of venture capital between 2008 and 2010.

Is the venture industry prepared for a downturn? The following chart shows how much capital has been raised in the US venture industry over the past 5-plus years—over $100 billion since 2009.  It is very hard to know exactly how much has been invested by each individual firm, but it is possible to estimate how rapidly funds have deployed their capital over the past 5 years, and how much capital is reserved for a rainy day.  Most funds commit their capital over a 3-5 year investment period, with the vast majority of new investments made in the first 3 years and the remainder of the funds “reserved” for follow-on investments in that fund over the subsequent 5-7 years.  Using a set of assumptions* to gauge how fast each fund invests their capital, we can estimate how much capital is reserved across the industry.  Based on the chart below, our best

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UPDATE: Signal or Noise? NEA’s Experience with Signaling Risk

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*This updated post is a follow-up to my interview with Connie Loizos at StrictlyVC who posted my Q&A: Never Mind What Angels Say, VCs Have Your Back.  My original post was published in July 2013.

NEA is one of the largest VC firms by assets under management, and has quietly become one of the most active seed investors in the industry. Launching a seed program was controversial, both within the firm and throughout the seed investment community.  The primary concern was “signaling risk”, or the notion that when a large VC fund makes a seed investment but chooses not to invest in a Series A round, the company’s ability to raise additional capital is significantly impaired. That negative “signal” could damage both the reputation of the company and the relationship between the entrepreneur and its investor.  After 35 years of building a reputation of trust and respect with entrepreneurs, we probably worried as much—or more—about this “signaling risk” than anyone. As a result, since launching a dedicated seed program in early 2011, it’s something we have proactively measured and monitored from day one. The early results so far have been surprising to many with whom we’ve shared the data. 

NEA’s seed program has made more than 75 investments totaling north of $30 million. The portfolio spans multiple sectors of technology (consumer, enterprise, healthcare, energy) and geography (Silicon Valley, Boston, New York, LA, and DC) and represents the diversity of interests and strategies employed by our global partnership. We have recently analyzed our first cohort of 50 seed investments, all of whom raised their initial seed rounds between March 2011 and August 2013.  The data is as follows:

  • 50 total companies (100%)
  • 10 Series A Investments Led by NEA (20%)
  • 15 Series A Investments Led by Other VCs (30%)
  • 25 Total Series A Investments (50%)
  • 12 Wind Downs or M&A exits (24%) 
  • 13 companies currently “too early to tell”* (26%)

(*this category includes companies that have not yet tried to raise capital, have raised seed extensions in advance of Series A, or are otherwise too early to tell)

Given all of our concern about signaling risk, we expected to see more companies that are NOT funded by NEA struggle to raise a Series A.  Instead, we have found the opposite. 

  • At this stage, 50% of our seed companies are getting financed by a VC firm, NEA or otherwise, at Series A.  Our best guess is that more than 60% will be successful when this cohort fully matures.
  • Our seed funded companies have been 50% more likely to get financed by another VC firm, NOT NEA.  This is the exact opposite of what you would Continue reading "UPDATE: Signal or Noise? NEA’s Experience with Signaling Risk"

Opower IPO: Big Data is a Big Deal for Climate Change

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“Give me a place to stand, and I shall move the world” – Archimedes, c250 B.C.

Today we are excited to be a part of Opower’s IPO—an amazing milestone for founders Dan Yates and Alex Laskey, who shared the vision that a software company using big data and behavioral science could one day affect climate change. 

We first met Dan and Alex six years ago when Opower was piloting a new kind of energy efficiency program to just a few thousand homes with a small utility in Sacramento, California.  The program had a simple hypothesis:  by giving people personalized data-driven insights about their energy consumption, you could help them save energy. Inspired by Dan and Alex’s enthusiasm and belief that Opower would one day become pervasive in the global utility industry, NEA led the their first round of institutional venture capital when the company had just 12 employees.

Since 2008, my partner Harry Weller and I have had the privilege of being a part of Opower’s journey, and watching Dan and Alex’s dream become a reality.  Opower today reaches over 32 million households and businesses through 93 utilities in eight countries, analyzing over 100 billion meter reads a year.  Their IPO milestone today will enable the company to continue to deploy its products around the world, working hand in hand with some of the largest customers in the $2.2 trillion utility industry. 

The utility industry has historically underinvested in technologies such as CRM and consumer engagement (a company like Opower could not have been imagined just 10 years ago!)  In recent years the industry has changed, and utilities have come under increasing regulatory and environmental pressure to build fewer power plants, find cleaner sources of fuel, and compete with new entrants like solar installers.  Around the world, utilities are embracing Opower to leverage advanced behavioral science, cloud computing, and “Big Data” analytics to give us all a rich understanding of our energy use.  The results are inspiring – Opower provides utilities with a reliable low-cost alternative to building more power plants, saves money for consumers on energy bills, and prevents tons of wasteful carbon emissions every year. 

Opower was far from an overnight success and required amazing passion and persistence to overcome the odds.  The company’s remarkable journey can be attributed to two incredible entrepreneurs who have largely defied and debunked conventional wisdom:

  • First, in an industry where billions of dollars are invested annually in R&D to supply the world with clean, cheap, renewable energy, Opower has always focused on transforming consumer demand through software. In doing so, they have become one of the largest “virtual power plants” in Continue reading "Opower IPO: Big Data is a Big Deal for Climate Change"