- In a world where mega-investors like SoftBank write $100 million checks from SoftBank, UpFront Ventures Partner Kara Nortman says there’s still a need for early-stage investors.
- Nortman, speaking at the Milken Institute Global Conference on Monday, said UpFront stepped up to lead a late-stage investment in video doorbell company Ring after another investor “got spooked” over a pending lawsuit against the company.
- A few months after that, Ring got acquired by Amazon for $1 billion — so her big check ended up paying off for the venture firm as well, she added.
- The lesson? Early stage investors will stick with the companies they believe in when others turn away, Nortman said.
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BEVERLY HILLS— If you want to know the value of early stage venture capital in a world where mega-investors like SoftBank regularly write $100 million checks, look no further than a moment of crisis.
One of UpFront Ventures Partner Kara Nortman’s biggest exits came after a follow-on round that almost didn’t happen, she said Monday at the Milken Institute Global Conference.
“The lead investor got spooked and pulled out,” Nortman said, who sat next to SoftBank’s Akshay Naheta on the panel.
Ring, the video doorbell company, ultimately got acquired by Amazon for $1 billion in 2018. But just a few months before, the future of the company was in jeopardy due to a skittish late stage investor.
“The final round, they had a big late stage investor who was going to lead the round — they’ll remain nameless — and [Ring] had a frivolous lawsuit out there against them,” Nortman said. “In a very short period of time, a week or two, we stepped up and we led what became an $80 million round with a $20 million lead check…which ended up becoming a great financial return and success story.”
While Nortman didn’t disclose on stage which investor pulled out, Recode reported last year that it was Valor Equity Partners.
Ultimately, Nortman argued, early stage venture investors are more likely to have faith in a founding team and its vision, so they’ll step up even when other investors have shied away.
So while investors like SoftBank can win deals based on the size of their checks alone, there’s still a role for the old-school venture-founder relationship, she said.
“When you talk to [Ring founder] Jamie Siminoff about that now, he will say, ‘they were my early stage fund.’ But we had seen him execute all the way through, so when the market had a frightened moment, we could step up and catalyze that,” Nortman said.
“I think that is the value of a longterm early stage investor. Our job is to help you build the team, help you get capital, and be your sparring partner. I don’t think that ever goes away,” she added.
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