Helping StumbleUpon's founders buy back the startup from eBay Inc. (NASDAQ:EBAY) offers a hint of the innovative deals we can expect to see from August Capital Management LLC's new $650 million balanced-stage fund.
Partner
David Hornik (pictured) tells The Deal that the firm has ambitious plans for the
fund, which beat the firm's 2005 fund by $100 million and was the biggest venture capital fund raised in an otherwise rather
disappointing first quarter.
"We can invest as much as $300 million in a single investment," Hornik says, explaining that last week's StumbleUpon
deal offers a small taste of bigger things to come. In that deal, founders Garrett Camp and Geoff Smith and investors including August Capital bought the recommendation engine back from eBay, which had acquired it two years ago for $75 million.
"I've been
excited about StumpleUpon for several years now and tried to
fund it before it was bought by eBay," says Hornik. "I was disappointed
to see it sell to eBay, and the opportunity to spin it back out of eBay under terms that I think will be advantageous to investors struck me as a no brainer."
August Capital has a tradition of using economic downturns to its advantage.
"We were part of the syndicate that took Seagate
private, and that was
an interesting opportunity that existed only as a result of that point
in time in 2000," says Hornik. "I think we look forward to seeing other opportunities like that. StumbleUpon is a
smaller version of that and a great example of what's advantageous about investing in this time."
August Capital
boasts one of the longest and winningest track records in the VC business. It was co-founded in 1995 by John Johnston and David Marquardt. The latter's
previous firm, Technology Venture Investors, or TVI, was the sole investor in Microsoft Corp. (NASDAQ:MSFT), and Marquardt has been on the software giant's board of directors since 1981. Today, August Capital has six partners who manage $1.3 billion.
Click
here for more of The Deal's Q&A with August Capital's David Hornik. -
Mary Kathleen Flynn
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