Wealthy Venture Capitalists
Venture capital is the investment provided to startup companies that cannot receive cash by traditional methods such as issuing debt. Generally these companies are new to the market or have a short operating history. Although these are generally risky investments, if the company succeeds the venture capitalist can make a huge return on the investment. As a result, many venture capitalists have been the forces behind several successful starts such as Groupon, LinkedIn, Skype, YouTube, Paypal, Facebook and many others. Very few have success in this game, but the ones that can see the startups future potential from the beginning have reaped some enormous returns. Although venture capital is very difficult to receive, if you can convince one of these wealthy venture capitalists to invest in your startup chances are you'll strike it rich.
Jim Breyer is a partner at Accel Partners and President of Accel Management Company. Breyer is worth around $1.1 billion and is number 1,075 on Forbes Billionaire list. Breyer has funded several successful startups, but most notably he is responsible for Accel Partner's investment of around $12.7 million in Facebook now worth an estimated $5 billion dollars. Breyer also serves on the board of directors for Walmart, Dell and News Corp.
Dubbed "the most connected person in Silicon Valley," Reid Hoffman has invested in what feels like every successful startup either personally or through Greylock Partners. If it involves the Internet, social networking, online marketplaces or social gaming chances are strong that Hoffman either provided funding or decided not to. He has provided venture capital funding to Groupon, Digg, Airbnb, Flickr, Zynga, PayPal and Facebook. He also co-founded LinkedIn in 2003. Hoffman's net worth is roughly $1.8 billion from his successful endeavors.
Peter Fenton is known for investing in Twitter, JBoss, Zimbra, FriendFeed and many others. It appears almost everything Fenton touches gets acquired by a large competitor. Fenton was previously a partner at Accel Partners, but joined Benchmark Capital in 2006. Today he serves on the board for roughly 12 different companies including Twitter and Yelp.
Peter Thiel co-founded PayPal in 1998 and served as the Chairman and CEO until the eBay acquisition in 2002. He has since started hedge fund Clarium Capital Management. He also co-founded software company Palantir Technologies. Thiel was the first outside investor in Facebook. As an angel investor in Facebook, Thiel made a $500,000 investment back in 2004. Today it is worth approximately $2.5 billion. Thiel is also known for his radical mentorship program called The Thiel Fellowship where he encourages students to either not attend college or drop out and start a business instead. The Thiel Fellowship offers the winners $100,000 to start a business as well as his mentorship for two years.
Another partner at Accel Partners, Kevin Efrusy was a successful entrepreneur himself before turning into a venture capital titan. He started Corio, a software-as-a-service company, which was purchased by IBM in 2005. Efrusy also started an online marketplace for heavy equipment called IronPlanet. Today he has invested in BranchOut, Groupon, Metacafe, RAMP, Shoes4You, Facebook and many others.
Jeremy Levine has provided venture capital funding to several popular social media sites like Yelp, LinkedIn and Pinterest, where he is currently the largest shareholder. On top of being a partner at Bessemer Venture Partners, Levine also serves on the board of directors for Wikia, Yelp, Pinterest and Spotify.
The process for deciding what venture capitalists invest in is very strategic and designed to weed out poor investments. Jim Breyer says "we see 10,000 media business plans a year, and invest in about 10." Ironically, the majority have invested in Facebook and are reaping the rewards for doing so. Facebook comes across as the goose that continues to lay golden eggs for shareholders. Although getting venture capital may require the founders to give up an equity stake, the connections and expertise of the venture capitalist may well be worth the risk.