Jeff Crowe is Managing Partner of Norwest Venture Partners.
AdExchanger.com: With investments in Brand.net and Turn, obviously Norwest Venture Partners (NVP) appears bullish on the digital media buying space. What drove NVP to invest in each of these companies?
JC: Overall, we have been bullish on the digital advertising space for several years and continue to look for investment opportunities in that arena. Regarding Turn specifically, we saw an opportunity to invest in a great team and powerful technology platform for advertisers. Over time, we believe that significant value accrues to companies in the online advertising space who have deep technology capability, and that is certainly playing out for Turn now, with their leading demand side platform. Regarding Brand.net, we invested in a team with deep domain expertise and ability to execute. Moreover, we believe that brand advertisers today want digital advertising solutions that make it easy for them to buy online media that meets their quality, reach and frequency requirements, and Brand.net’s offerings meet those needs uniquely well. Both Turn and Brand.net have seen sharp growth in 2009, even in the midst of a sluggish year for online advertising.
Has your prior experience as President and COO of DoveBid, Inc., a business auction firm, given you insights into how the auction model may become an important part of advertising?
DoveBid was one of the first companies back in 2000 to offer real-time, online bidding for used assets and excess inventory. Real time bidding back then quickly resulted in higher pricing for sellers because more buyers were easily able to target their purchases more effectively. Moreover, the flow and liquidity in the markets grew significantly, benefitting all players. The parallels from those days to what we are seeing now with the introduction of real time bidding in today’s advertising exchanges world are striking. I believe that we will see similar increases in volume, liquidity and pricing for online advertising with the increasing adoption of RTB.
What are the attributes of a good start-up company board?
A start-up board should be able to help the management team with strategy, business development, recruiting and fund raising. A good board will have the operating experience, strategic perspective, personal networks and access to funds to help in the appropriate fashion. It will also have the right combination of patience and high expectations to help the management team navigate the ups and downs of start-up life.
What types of investments is Norwest Venture Partners looking to make today?
We are investing actively across all investment stages across multiple geographies, from Series A start-ups to later stage growth equity companies in the U.S., India, China and Israel. Over the last 12 months we have invested anywhere from $1M to $50M in companies. In the U.S. we are looking at investments across the spectrum of information technology including digital media, consumer internet, business and consumer services, enterprise software and infrastructure. We continue to look at opportunities in the digital media space.
What's the biggest mistake that entrepreneurs make when dealing with the VC community?
Most often we do not invest in a start-up because we believe that the product / market combination will not yield a big enough outcome – either the product offering is not differentiated enough or the market opportunity is too small.
What do you enjoy about being a VC? Any downsides?
It is fascinating to continually meet sharp, motivated entrepreneurs who are pursuing new ideas. The intellectual stimulation of being a venture capitalist cannot be beat. I also really enjoy working with the management teams of our portfolio companies to grow their businesses. The downside for me is having to say no to many of the entrepreneurs who come to us looking for funding –- having co-founded a company myself and raised venture capital back in the ‘90s, I can relate to their position.
Do you expect M&A or even the IPO market to pick up in the coming year? What's your view on 2010?
With the rise of the stock market over the last 6 months, M&A and even IPO activity are now picking up for technology and media companies. Just last week, one of our portfolio companies, Lifesize Communications, announced its pending sale to Logitech at a very nice return for employees and investors. We believe that the U.S. and world economy will improve somewhat in 2010, and we expect enhanced growth opportunities for our companies. But we don’t try to predict future moves in the stock market and therefore don’t know whether M&A and IPO activity will continue to heat up or will slow down next year. So we are always counseling our portfolio companies not to expect an exit in any specific time frame, but to manage their businesses for the long term.
How does the "Alley versus the Valley" look to you today? Noticing any trends?
We continue to look for investment opportunities in both the Valley and the Alley. Obviously the flow of companies is greater in Silicon Valley, but we see very interesting media and advertising businesses in NYC. Innovation is flouring in both locales.