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Reid Hoffman isn't putting his money in a whole lot of very young startups these days, but it's not because he doesn't want to. The storied angel investor and Web visionary is just a bit too tied up with running career networking site LinkedIn Corp.
Hoffman is reprising his role as CEO of LinkedIn, having replaced former CEO Dan Nye in December. Nye had taken over from Hoffman, who co-founded and is also chairman of the company, two years prior. "If I wasn't busy at LinkedIn, I'd be hunting for investments," Hoffman told a Churchill Club gathering in Palo Alto, Calif., Monday night. Indeed, despite the gloom that has suffused the private investment world, now is a perfect time to turn an idea into a business, he said. "It's a great time to start a company," said Hoffman, an early investor in Facebook, Digg and Technorati, among others. Certainly, it's much tougher to raise money, but "the opportunity to get talent, have a long runway, et cetera, et cetera, is good." Hoffman invested in eight deals last year and said if he "had time I'd do more than that this year." While Hoffman has a valid excuse for pulling back, he said that many angels are reducing their investment levels for different reason: They are becoming overly cautious. "Angels are doing a lot less, but my general view is this is a time to do more," he said. Too many angels and early-stage VCs are too concerned about the lack of liquidity and worried about where the market is going, but this shouldn't stifle funding, Hoffman warned. "Overprediction in this market strikes me as a fool's game," he said, noting that the average time to liquidity for an angel investor is seven years. "The current market has very little to do with planning other than for intermediate rounds of capital and valuation." LinkedIn's last funding arrived in October, when it announced a $22.7 million investment from new investors Goldman, Sachs & Co. (NYSE:GS), McGraw Hill Cos. (NYSE:MHP) and SAP Ventures, with previous backer Bessemer Venture Partners also joining the round. The investment was a follow-on to a $53 million Series D round the company announced last June, and topped off LinkedIn's total investment at somewhere around $80 million. The company's fundraising was blessed with good timing and followed the same advice Hoffman offered Monday night: Raise as much money as you can, because you don't know how long these conditions will last. Yet, despite the fact that LinkedIn has grown into a hot Internet property, Hoffman said the company is treading carefully in a year of uncertainty. "We are planning for another substantial growth year, but are carefully monitoring metrics so just the weirdness of being in 2009 doesn't throw something off," he said. Whether another "growth year" means LinkedIn will be on the hunt for even more VC money is open to speculation. But with the amount of money it has already raised, the company will have to eventually do what Hoffman, at least when he is wearing his angel hat (or halo?), admits he doesn't spend too much time worrying about: monetizing a fast-growing pool of users. - Olaf de Senerpont Domis
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