96-630: Kleiner Perkins, formerly Kleiner Perkins Caufield & Byers ( KPCB ), is an American venture capital firm which specializes in investing in incubation, early stage and growth companies. Since its founding in 1972, the firm has backed entrepreneurs in over 900 ventures, including America Online , Amazon.com , Tandem Computers , Compaq , Electronic Arts , JD.com , Square , Genentech , Google , Netscape , Sun Microsystems , Nest , Palo Alto Networks , Synack , Snap , AppDynamics , and Twitter . By 2019 it had raised around $ 9 billion in 19 venture capital funds and four growth funds. Kleiner Perkins
192-509: A capitalist , is a person who makes capital investments in companies in exchange for an equity stake . The venture capitalist is often expected to bring managerial and technical expertise, as well as capital, to their investments. A venture capital fund refers to a pooled investment vehicle (in the United States, often an LP or LLC ) that primarily invests the financial capital of third-party investors in enterprises that are too risky for
288-512: A corporate attorney at Cravath, Swaine & Moore . In 1998, Pao worked at WebTV . Pao worked at several companies in Silicon Valley including BEA Systems as Senior Director of Corporate Business Development from 2001 until 2005. In 2005, Pao joined Kleiner Perkins, an established venture capital firm in San Francisco, as technical chief of staff for John Doerr , a senior partner,
384-424: A gender discrimination suit against Kleiner Perkins which went to trial in late February 2015. It was covered by the national media and elicited broad comment regarding the issues raised. The case was live blogged and tweeted constantly, to the point of providing both humorous and serious feedback to lawyers and witnesses. The trial, lasting 24 days, resulted in a favorable verdict for Kleiner Perkins. While
480-459: A consequence, most venture capital investments are done in a pool format, where several investors combine their investments into one large fund that invests in many different startup companies. By investing in the pool format, the investors are spreading out their risk to many different investments instead of taking the chance of putting all of their money in one start up firm. Venture capital firms are typically structured as partnerships ,
576-646: A decade later in 1994. The advent of the World Wide Web in the early 1990s reinvigorated venture capital as investors saw companies with huge potential being formed. Netscape and Amazon (company) were founded in 1994, and Yahoo! in 1995. All were funded by venture capital. Internet IPOs—AOL in 1992; Netcom in 1994; UUNet, Spyglass and Netscape in 1995; Lycos, Excite, Yahoo!, CompuServe, Infoseek, C/NET, and E*Trade in 1996; and Amazon, ONSALE, Go2Net, N2K, NextLink, and SportsLine in 1997—generated enormous returns for their venture capital investors. These returns, and
672-508: A discrimination claim was made by Microsoft researcher Katie Moussouris . Following the trial, Kleiner Perkins sought $ 972,814 in legal costs but offered to withdraw the request if Pao declined to appeal the verdict. On June 1, 2015, Pao filed an appeal, one week before the deadline. On June 5, Kleiner Perkins claimed that Pao wanted $ 2.7 million to not appeal, an amount which they called "improper and excessive". A judge ruled on June 18 that Pao would only be responsible for $ 275,966 citing
768-573: A finance background. Venture capitalists with an operational background ( operating partner ) tend to be former founders or executives of companies similar to those which the partnership finances or will have served as management consultants. Venture capitalists with finance backgrounds tend to have investment banking or other corporate finance experience. Although the titles are not entirely uniform from firm to firm, other positions at venture capital firms include: The average maturity of most venture capital funds ranges from 10 years to 12 years, with
864-437: A fund, the investors have a fixed commitment to the fund that is initially unfunded and subsequently "called down" by the venture capital fund over time as the fund makes its investments. There are substantial penalties for a limited partner (or investor) that fails to participate in a capital call . It can take anywhere from a month to several years for venture capitalists to raise money from limited partners for their fund. At
960-471: A job that required degrees in engineering, law, and business and experience in enterprise software. In 2007 she was appointed a Crown Fellow of the Aspen Institute on the recommendation of Doerr, a trustee. Also in 2007, she became a junior investing partner with Ted Schlein as her boss. While at Kleiner Perkins, Pao led the company's expansion into China. After several years with Schlein's team, Pao
1056-477: A later post, which recalled two instances of Pao arguing against purging hateful subreddits, Wong sharply criticized the movement against her and warned about stricter policies under the site's cofounders. Huffman followed this by enacting a policy to reduce the prominence of some xenophobic communities and ban some others . On July 13, Reddit's chief engineer Bethanye Blount left the company for unrelated reasons and opined that Pao did not receive enough support from
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#17328870369871152-513: A post on Reddit, signed by Pao and two other executives, announced that five subreddits were being banned for fostering off-site harassment. One such community , r/FatPeopleHate, had over 150,000 subscribers. Multiple change.org petitions calling for Pao's resignation were created by displeased Reddit users and the most popular one reached 10,000 signatures in the days following the change. Some users began posting hateful comments and images about Pao on Reddit and other websites. Other complaints about
1248-578: A process known as "generating deal flow," where they reach out to their network to source potential investments. The study also reported that few VCs use any type of financial analytics when they assess deals; VCs are primarily concerned about the cash returned from the deal as a multiple of the cash invested. According to 95% of the VC firms surveyed, VCs cite the founder or founding team as the most important factor in their investment decision. Other factors are also considered, including intellectual property rights and
1344-803: A return of over 1200 times its investment and an annualized rate of return of 101% to ARDC. Former employees of ARDC went on to establish several prominent venture capital firms including Greylock Partners , founded in 1965 by Charlie Waite and Bill Elfers; Morgan, Holland Ventures, the predecessor of Flagship Ventures, founded in 1982 by James Morgan; Fidelity Ventures, now Volition Capital, founded in 1969 by Henry Hoagland; and Charles River Ventures , founded in 1970 by Richard Burnes. ARDC continued investing until 1971, when Doriot retired. In 1972 Doriot merged ARDC with Textron after having invested in over 150 companies. John Hay Whitney (1904–1982) and his partner Benno Schmidt (1913–1999) founded J.H. Whitney & Company in 1946. Whitney had been investing since
1440-411: A role in managing entrepreneurial companies at an early stage, thus adding skills as well as capital, thereby differentiating VC from buy-out private equity, which typically invest in companies with proven revenue, and thereby potentially realizing much higher rates of returns. Inherent in realizing abnormally high rates of returns is the risk of losing all of one's investment in a given startup company. As
1536-442: A series of meetings with clients and publishes anonymized progress reports under a Creative Commons license. Reports on the aftermath of Pao v. Kleiner Perkins included speculation that Pao had agreed not to write a book detailing her experiences at the company. In November 2015, Pao revealed that this was not the case and later confirmed that she was writing a memoir. In a May 2016 interview, Pao stated that she planned to finish
1632-402: A significant portion of the companies' ownership (and consequently value). Companies who have reached a market valuation of over $ 1 billion are referred to as Unicorns . As of May 2024 there were a reported total of 1248 Unicorn companies. Venture capitalists also often provide strategic advice to the company's executives on its business model and marketing strategies. Venture capital is also
1728-520: A successful exit within the required time frame (typically 8–12 years) that venture capitalists expect. Because investments are illiquid and require the extended time frame to harvest, venture capitalists are expected to carry out detailed due diligence prior to investment. Venture capitalists also are expected to nurture the companies in which they invest, in order to increase the likelihood of reaching an IPO stage when valuations are favourable. Venture capitalists typically assist at four stages in
1824-417: A tweet through her official Twitter profile, stating the need to "call out" Reddit's leadership. The tweet contained arguments against current Reddit CEO Steve Huffman (registered on Reddit as /u/spez). Pao deemed him as responsible for the rampant racism and hatred on the platform, accusing Reddit of "monetizing white supremacy". Huffman had previously released an open letter on the website in response to
1920-523: A variant known as "Speed Venturing", which is akin to speed-dating for capital, where the investor decides within 10 minutes whether he wants a follow-up meeting. In addition, some new private online networks are emerging to provide additional opportunities for meeting investors. This need for high returns makes venture funding an expensive capital source for companies, and most suitable for businesses having large up-front capital requirements , which cannot be financed by cheaper alternatives such as debt. That
2016-424: A way in which the private and public sectors can construct an institution that systematically creates business networks for the new firms and industries so that they can progress and develop. This institution helps identify promising new firms and provide them with finance, technical expertise, mentoring , talent acquisition, strategic partnership, marketing "know-how", and business models . Once integrated into
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#17328870369872112-430: Is a form of private equity financing provided by firms or funds to startup , early-stage, and emerging companies, that have been deemed to have high growth potential or that have demonstrated high growth in terms of number of employees, annual revenue, scale of operations, etc. Venture capital firms or funds invest in these early-stage companies in exchange for equity , or an ownership stake. Venture capitalists take on
2208-436: Is attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering . In exchange for the high risk that venture capitalists assume by investing in smaller and early-stage companies, venture capitalists usually get significant control over company decisions, in addition to
2304-466: Is crucial for startups to kickstart their journey and attract further investment in subsequent funding rounds. Typical venture capital investments occur after an initial " seed funding " round. The first round of institutional venture capital to fund growth is called the Series A round . Venture capitalists provide this financing in the interest of generating a return through an eventual "exit" event, such as
2400-418: Is different. Venture capital funds are generally three in types: Some of the factors that influence VC decisions include: Within the venture capital industry, the general partners and other investment professionals of the venture capital firm are often referred to as "venture capitalists" or "VCs". Typical career backgrounds vary, but, broadly speaking, venture capitalists come from either an operational or
2496-520: Is focused on early stage investments in the "consumer, enterprise, hard tech and fintech" sectors. The firm raised US $ 600 million for its 18th fund, KP XVIII, in January 2019. In March 2008 Kleiner Perkins announced the iFund , a $ 100 million venture capital investment initiative that funds concepts related to the iPhone, and doubled that investment a year later. It was reported in April 2008 that Kleiner Perkins
2592-517: Is headquartered in Menlo Park in Silicon Valley , with offices in San Francisco and Shanghai , China. The New York Times described Kleiner Perkins as "perhaps Silicon Valley 's most famous venture firm". The Wall Street Journal called it one of the "largest and most established" venture capital firms and Dealbook named it "one of Silicon Valley's top venture capital providers." The firm
2688-414: Is most commonly the case for intangible assets such as software, and other intellectual property, whose value is unproven. In turn, this explains why venture capital is most prevalent in the fast-growing technology and life sciences or biotechnology fields. If a company does have the qualities venture capitalists seek including a solid business plan, a good management team, investment and passion from
2784-508: Is often credited with the introduction of the term "venture capitalist" that has since become widely accepted. During the 1960s and 1970s, venture capital firms focused their investment activity primarily on starting and expanding companies. More often than not, these companies were exploiting breakthroughs in electronic, medical, or data-processing technology. As a result, venture capital came to be almost synonymous with financing of technology ventures. An early West Coast venture capital company
2880-412: Is substantially different from raising debt or a loan. Lenders have a legal right to interest on a loan and repayment of the capital irrespective of the success or failure of a business. Venture capital is invested in exchange for an equity stake in the business. The return of the venture capitalist as a shareholder depends on the growth and profitability of the business. This return is generally earned when
2976-667: The Employee Retirement Income Security Act (ERISA) in 1974, corporate pension funds were prohibited from holding certain risky investments including many investments in privately held companies. In 1978, the US Labor Department relaxed certain restrictions of the ERISA, under the " prudent man rule " , thus allowing corporate pension funds to invest in the asset class and providing a major source of capital available to venture capitalists. The public successes of
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3072-504: The George Floyd protests , in which he affirmed that the platform "[does] not tolerate hate, racism, and violence." Pao, however, found his remarks hypocritical and criticized Huffman. Several popular subreddits, such as r/NBA and r/NFL, agreed with Pao, shutting down their pages for 24 hours, in a polemic against Huffman, calling out his letter as "hypocritical" and asking Reddit's leadership to take more concrete actions against racism on
3168-484: The Santa Clara Valley as well as early computer firms using their devices and programming and service companies. Venture capital firms suffered a temporary downturn in 1974, when the stock market crashed and investors were naturally wary of this new kind of investment fund. Nevertheless, the firm was still active in this period. By 1996, Kleiner Perkins had funded around 260 companies a total of $ 880 million. Beyond
3264-1027: The Wallenbergs , the Vanderbilts , the Whitneys , the Rockefellers , and the Warburgs were notable investors in private companies. In 1938, Laurance S. Rockefeller helped finance the creation of both Eastern Air Lines and Douglas Aircraft , and the Rockefeller family had vast holdings in a variety of companies. Eric M. Warburg founded E.M. Warburg & Co. in 1938, which would ultimately become Warburg Pincus , with investments in both leveraged buyouts and venture capital. The Wallenberg family started Investor AB in 1916 in Sweden and were early investors in several Swedish companies such as ABB , Atlas Copco , and Ericsson in
3360-516: The Woodrow Wilson School of Public and International Affairs at Princeton University in 1991 after completing a 143-page senior thesis titled "Computer Databases and Business: An Analysis of Informational Privacy." She then attended Harvard Law School , where she earned a Juris Doctor in 1994. After two years of working, Pao returned to attend Harvard Business School , where she received an MBA in 1998. From 1994 to 1996, Pao worked as
3456-779: The general partners of which serve as the managers of the firm and will serve as investment advisors to the venture capital funds raised. Venture capital firms in the United States may also be structured as limited liability companies , in which case the firm's managers are known as managing members. Investors in venture capital funds are known as limited partners . This constituency comprises both high-net-worth individuals and institutions with large amounts of available capital, such as state and private pension funds , university financial endowments , foundations, insurance companies, and pooled investment vehicles, called funds of funds . Venture capitalist firms differ in their motivations and approaches. There are multiple factors, and each firm
3552-722: The 1930s, founding Pioneer Pictures in 1933 and acquiring a 15% interest in Technicolor Corporation with his cousin Cornelius Vanderbilt Whitney . Florida Foods Corporation proved Whitney's most famous investment. The company developed an innovative method for delivering nutrition to American soldiers, later known as Minute Maid orange juice and was sold to The Coca-Cola Company in 1960. J.H. Whitney & Company continued to make investments in leveraged buyout transactions and raised $ 750 million for its sixth institutional private-equity fund in 2005. One of
3648-493: The amount of capital invested). Venture capital investors sought to reduce the size of commitments they had made to venture capital funds, and, in numerous instances, investors sought to unload existing commitments for cents on the dollar in the secondary market . By mid-2003, the venture capital industry had shriveled to about half its 2001 capacity. Nevertheless, PricewaterhouseCoopers' MoneyTree Survey shows that total venture capital investments held steady at 2003 levels through
3744-415: The board. Specifically, she referenced the glass cliff phenomenon in which women are allegedly given disproportionately unstable leadership positions. On July 16, Pao wrote about the difficulty of combating harassment while preserving "edgy content". The editorial described what she called "one of the largest trolling attacks in history" and the subsequent outpouring of support. In June 2020, Pao released
3840-684: The book before seeking a full-time job. One month later, the book was acquired by Spiegel and Grau and given the title Reset: My Fight for Inclusion and Lasting Change . The book was shortlisted for the 2017 Financial Times and McKinsey Business Book of the Year Award . In 2017, she became a partner at Kapor Capital and the Chief Diversity and Inclusion Officer at the Kapor Center for Social Impact before leaving in 2018 to focus on her role as Project Include's CEO . On May 10, 2012, Pao filed
3936-461: The business network, these firms are more likely to succeed, as they become "nodes" in the search networks for designing and building products in their domain. However, venture capitalists' decisions are often biased, exhibiting for instance overconfidence and illusion of control, much like entrepreneurial decisions in general. Before World War II (1939–1945) venture capital was primarily the domain of wealthy individuals and families. J.P. Morgan ,
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4032-632: The changing conditions, corporations that had sponsored in-house venture investment arms, including General Electric and Paine Webber either sold off or closed these venture capital units. Additionally, venture capital units within Chemical Bank and Continental Illinois National Bank , among others, began shifting their focus from funding early stage companies toward investments in more mature companies. Even industry founders J.H. Whitney & Company and Warburg Pincus began to transition toward leveraged buyouts and growth capital investments. By
4128-536: The company on all counts. Pao joined Reddit in 2013 as the head of business development and strategic partnerships. One of her first investments made in this capacity strengthened the ties between Reddit and its de facto image host Imgur . She stated that a goal for the following year was making it easier for people to become Redditors. Pao became interim CEO in November 2014 after Yishan Wong resigned. Following efforts by Wong to scale back salary negotiation during
4224-405: The company selling shares to the public for the first time in an initial public offering (IPO), or disposal of shares happening via a merger, via a sale to another entity such as a financial buyer in the private equity secondary market or via a sale to a trading company such as a competitor. In addition to angel investing , equity crowdfunding and other seed funding options, venture capital
4320-413: The company's development: Because there are no public exchanges listing their securities, private companies meet venture capital firms and other private-equity investors in several ways, including warm referrals from the investors' trusted sources and other business contacts; investor conferences and symposia; and summits where companies pitch directly to investor groups in face-to-face meetings, including
4416-506: The course of the decade. The growth of the industry was hampered by sharply declining returns, and certain venture firms began posting losses for the first time. In addition to the increased competition among firms, several other factors affected returns. The market for initial public offerings cooled in the mid-1980s before collapsing after the stock market crash in 1987, and foreign corporations, particularly from Japan and Korea , flooded early-stage companies with capital. In response to
4512-479: The dismissal of Victoria Taylor, Reddit's director of talent, known for co-ordinating the Ask Me Anything interviews. Expressing frustration over the decline in communication from Reddit management, AMA moderators stated that they had only learned about the firing indirectly after it happened. Despite one post to the contrary, Taylor's dismissal was widely attributed to Pao, with some commentators suggesting that
4608-483: The economic resources of both parties under the Fair Employment and Housing Act . Pao filed an objection, arguing that an award against her could result in a chilling effect on future discrimination cases. On September 10, 2015, Pao wrote a guest post for Re/code in which she urged companies to be more open about bias accusations made by their employees. She also noted that there are behaviors that do not quite cross
4704-429: The emergence of the independent investment firms on Sand Hill Road , beginning with Kleiner Perkins and Sequoia Capital in 1972. Located in Menlo Park, California , Kleiner Perkins, Sequoia and later venture capital firms would have access to the many semiconductor companies based in the Santa Clara Valley as well as early computer firms using their devices and programming and service companies. Kleiner Perkins
4800-451: The end of the 1980s, venture capital returns were relatively low, particularly in comparison with their emerging leveraged buyout cousins, due in part to the competition for hot startups, excess supply of IPOs and the inexperience of many venture capital fund managers. Growth in the venture capital industry remained limited throughout the 1980s and the first half of the 1990s, increasing from $ 3 billion in 1983 to just over $ 4 billion more than
4896-439: The firm has vigorously denied. On 27 March 2015, after a month-long trial, the jury found against Pao on all claims. In June 2015, Pao filed an appeal. In September 2015, Pao announced she would no longer appeal the jury verdict. In September 2018, Kleiner Perkins announced it was spinning out its digital growth team into a new independent firm. The firm announced its 19th fund on 31 January 2019 after raising $ 600 million. The fund
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#17328870369874992-408: The firm. It was Pao's contention in her suit for gender discrimination that men with similar profiles were, nevertheless, promoted. On May 10, 2012, Pao filed a gender discrimination lawsuit against her employer. The lawsuit alleged workplace retaliation by a male junior partner, resulting from his and Pao's romantic affair. She continued to work at the firm until October 1. Pao claimed that she
5088-505: The first half of the 20th century. Only after 1945 did "true" venture capital investment firms begin to emerge, notably with the founding of American Research and Development Corporation (ARDC) and J.H. Whitney & Company in 1946. Georges Doriot , the "father of venture capitalism", along with Ralph Flanders and Karl Compton (former president of MIT ) founded ARDC in 1946 to encourage private-sector investment in businesses run by soldiers returning from World War II. ARDC became
5184-407: The first institutional private-equity investment firm to raise capital from sources other than wealthy families. Unlike most present-day venture capital firms, ARDC was a publicly traded company. ARDC's most successful investment was its 1957 funding of Digital Equipment Corporation (DEC), which would later be valued at more than $ 355 million after its initial public offering in 1968. This represented
5280-539: The first steps toward a professionally managed venture capital industry was the passage of the Small Business Investment Act of 1958 . The 1958 Act officially allowed the U.S. Small Business Administration (SBA) to license private "Small Business Investment Companies" (SBICs) to help the financing and management of the small entrepreneurial businesses in the United States. The Small Business Investment Act of 1958 provided tax breaks that helped contribute to
5376-504: The founders, a good potential to exit the investment before the end of their funding cycle, and target minimum returns in excess of 40% per year, it will find it easier to raise venture capital. There are multiple stages of venture financing offered in venture capital, that roughly correspond to these stages of a company's development. In early stage and growth stage financings, venture-backed companies may also seek to take venture debt . A venture capitalist or sometimes simply called
5472-454: The hiring and promotion practices in Silicon Valley . In 2014, she became interim CEO of Reddit. During this period, the site banned revenge porn , with other social media sites following suit. In 2015, decisions made by the company during her tenure, such as the banning of controversial Reddit communities for harassment, generated a wave of controversy that culminated in her stepping down. The backlash she received sparked debates both on
5568-459: The hiring process, Pao decided to give two final offers (one with more cash, one with more equity) to all prospective employees. As motivation for the change, she cited findings that women were more likely to be penalized for attempting to negotiate pay. After seeing that Reddit's previous offers were not correlated with gender, Pao stated that the new policy was still the fairest, as well as a stepping stone to having publicly posted salaries. One of
5664-420: The initial stages of funding for a startup company, typically occurring early in its development. During a seed round, entrepreneurs seek investment from angel investors , venture capital firms, or other sources to finance the initial operations and development of their business idea. Seed funding is often used to validate the concept, build a prototype, or conduct market research . This initial capital injection
5760-411: The investment professionals served as general partner and the investors, who were passive limited partners , put up the capital. The compensation structure, still in use today, also emerged with limited partners paying an annual management fee of 1.0–2.5% and a carried interest typically representing up to 20% of the profits of the partnership. The growth of the venture capital industry was fueled by
5856-541: The investors invest with equal terms; or (2) asymmetric —where different investors have different terms. Typically asymmetry is seen in cases where investors have opposing interests, such as the need to not have unrelated business taxable income in the case of public tax-exempt investors. The decision process to fund a company is elusive. One study report in the Harvard Business Review states that VCs rarely use standard financial analytics. First, VCs engage in
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#17328870369875952-449: The largest changes made under Pao was the banning of revenge porn in March 2015. Other social networks that removed such images in the following months were widely referred to as following Reddit's model. In June and July 2015, Pao was the subject of criticism and harassment by Reddit users after five Reddit communities (subreddits) were banned for harassment and Reddit's director of talent
6048-520: The line but can subtly change how a woman is perceived in the workplace. In the Re/code post, she stated that she was deciding not to appeal but still paying $ 276,000 due to an additional stipulation by Kleiner Perkins that the fee could only be waived after signing a non-disparagement agreement. However, one week later when Pao formally dropped her appeal, Kleiner Perkins filed to close the case without payment per its original announcement. On June 10, 2015,
6144-572: The move diminished her credibility as an advocate for female employees. She received increased harassment as a result and the petition for her removal surpassed 200,000 signatures. On July 3, Pao issued apologies through Reddit and Time magazine. However, the Reddit post was thought to have been deleted after it received enough downvotes to lose visibility. In a longer post on July 6, she apologized for poor communication between staff members and for not delivering on promises. Pao resigned on July 10 and
6240-417: The number of women coming forward with claims of gender inequality and the term Pao effect was coined to describe the resulting increase in lawsuits. Though many reporters commented positively on the changing culture, some expressed a foreboding that companies would be less likely to hire women during a period of abundant legal action. Discussion of the trial's influence continued after its conclusion when
6336-807: The original founders, notable members of the firm have included individuals such as John Doerr , Vinod Khosla , and Bill Joy . Colin Powell joined as a "strategic" partner in 2005, while Al Gore joined as a partner in 2007 as part of a collaboration between Kleiner Perkins and Generation Investment Management . Mary Meeker joined the firm in 2010, and that year Kleiner Perkins expanded its practice to invest in growth stage companies. Meeker departed in 2019 to found Bond Capital. Mamoon Hamid from Social Capital and Ilya Fushman from Index Partners joined in 2017 and 2018 respectively, both as investing partners. The New York Times has described Kleiner Perkins as "perhaps Silicon Valley 's most famous venture firm". The firm
6432-412: The performance of the companies post-IPO, caused a rush of money into venture capital, increasing the number of venture capital funds raised from about 40 in 1991 to more than 400 in 2000, and the amount of money committed to the sector from $ 1.5 billion in 1991 to more than $ 90 billion in 2000. The bursting of the dot-com bubble in 2000 caused many venture capital firms to fail and financial results in
6528-1004: The platform. In 2021, amid the fraud trial of former Theranos CEO Elizabeth Holmes , Pao wrote in the New York Times that it can both be true that Holmes " should be held accountable for her actions" and that male CEOs not being similarly held to account for misjudgement and wrongdoing is a symptom of sexism . As examples, she cited Facebook 's role in facilitating the Rohingya genocide and propagating " anti-vaccination propaganda" under Mark Zuckerberg , Juul 's misleading promotion of nicotine products, including to children, under Kevin Burns, and numerous scandals at Uber under Travis Kalanick . Pao married Roger Kuo, they later divorced. She then married Buddy Fletcher in December 2007 in San Francisco. They met through Aspen Institute functions during
6624-535: The possibility of a few years of extensions to allow for private companies still seeking liquidity. The investing cycle for most funds is generally three to five years, after which the focus is managing and making follow-on investments in an existing portfolio. This model was pioneered by successful funds in Silicon Valley through the 1980s to invest in technological trends broadly but only during their period of ascendance, and to cut exposure to management and marketing risks of any individual firm or its product. In such
6720-467: The rise of private-equity firms. During the 1950s, putting a venture capital deal together may have required the help of two or three other organizations to complete the transaction. It was a business that was growing very rapidly, and as the business grew, the transactions grew exponentially. Arthur Rock , one of the pioneers of Silicon Valley during his venturing the Fairchild Semiconductor
6816-413: The risk of financing start-ups in the hopes that some of the companies they support will become successful. Because startups face high uncertainty, VC investments have high rates of failure. Start-ups are usually based on an innovative technology or business model and often come from high technology industries such as information technology (IT) or biotechnology . Pre-seed and seed rounds are
6912-494: The second quarter of 2005. Although the post-boom years represent just a small fraction of the peak levels of venture investment reached in 2000, they still represent an increase over the levels of investment from 1980 through 1995. As a percentage of GDP, venture investment was 0.058% in 1994, peaked at 1.087% (nearly 19 times the 1994 level) in 2000 and ranged from 0.164% to 0.182% in 2003 and 2004. The revival of an Internet -driven environment in 2004 through 2007 helped to revive
7008-414: The sector to decline. The Nasdaq crash and technology slump that started in March 2000 shook virtually the entire venture capital industry as valuations for startup technology companies collapsed. Over the next two years, many venture firms had been forced to write-off large proportions of their investments, and many funds were significantly " under water " (the values of the fund's investments were below
7104-451: The site focused on inadequate moderation tools and the fact that some posts critical of Pao's lawsuit had been deleted by moderators. So why am I leaving? Ultimately, the board asked me to demonstrate higher user growth in the next six months than I believe I can deliver while maintaining reddit's core principles. —Ellen Pao's resignation post Opposition increased on July 2 when large sections of Reddit were set to private to protest
7200-487: The standard capital markets or bank loans . These funds are typically managed by a venture capital firm, which often employs individuals with technology backgrounds (scientists, researchers), business training and/or deep industry experience. A core skill within VCs is the ability to identify novel or disruptive technologies that have the potential to generate high commercial returns at an early stage. By definition, VCs also take
7296-444: The state of the economy. Some argue that the most important thing a VC looks for in a company is high-growth. Ellen Pao Ellen Kangru Pao (born 1970) is an American investor and former interim CEO of social media company Reddit . Pao first became known in 2012 for filing a failed gender discrimination suit against her employer, venture capital firm Kleiner Perkins , and has continued to express vocal criticism of
7392-424: The time when all of the money has been raised, the fund is said to be closed and the 10-year lifetime begins. Some funds have partial closes when one half (or some other amount) of the fund has been raised. The vintage year generally refers to the year in which the fund was closed and may serve as a means to stratify VC funds for comparison. From an investor's point of view, funds can be: (1) traditional —where all
7488-470: The treatment of women in technology and the need for transparency in a company that relies on volunteers . Since 2016, she has been the cofounder and CEO of the nonprofit diversity consulting organization Project Include. Ellen Pao was born in 1970 in New Jersey. She is the middle child of three daughters born to Tsyh-Wen Lee and Young-Ping Pao, immigrants from Taiwan. Her father, Young-Ping Pao,
7584-469: The trial was taking place, a gender discrimination suit was filed against Twitter by Tina Huang, alleging that the company unlawfully favored men in the promotion process and a suit alleging sexual and racial discrimination was filed against Facebook by Chia Hong . Law professor Joan Williams commented that it would have been "quite a coincidence" if these actions were not influenced by Pao's suit. More broadly, employment lawyers described an increase in
7680-652: The venture capital environment. However, as a percentage of the overall private-equity market, venture capital has still not reached its mid-1990s level, let alone its peak in 2000. Venture capital funds, which were responsible for much of the fundraising volume in 2000 (the height of the dot-com bubble ), raised only $ 25.1 billion in 2006, a 2% decline from 2005 and a significant decline from its peak. The decline continued till their fortunes started to turn around in 2010 with $ 21.8 billion invested (not raised). The industry continued to show phenomenal growth and in 2020 hit $ 80 billion in fresh capital. Obtaining venture capital
7776-466: The venture capital industry in the 1970s and early 1980s (e.g., Digital Equipment Corporation , Apple Inc. , Genentech ) gave rise to a major proliferation of venture capital investment firms. From just a few dozen firms at the start of the decade, there were over 650 firms by the end of the 1980s, each searching for the next major "home run". The number of firms multiplied, and the capital managed by these firms increased from $ 3 billion to $ 31 billion over
7872-544: The venture capitalist "exits" by selling its shareholdings when the business is sold to another owner. Venture capitalists are typically very selective in deciding what to invest in, with a Stanford survey of venture capitalists revealing that 100 companies were considered for every company receiving financing. Ventures receiving financing must demonstrate an excellent management team, a large potential market, and most importantly high growth potential, as only such opportunities are likely capable of providing financial returns and
7968-516: Was Draper and Johnson Investment Company, formed in 1962 by William Henry Draper III and Franklin P. Johnson, Jr. In 1965, Sutter Hill Ventures acquired the portfolio of Draper and Johnson as a founding action. Bill Draper and Paul Wythes were the founders, and Pitch Johnson formed Asset Management Company at that time. It was also in the 1960s that the common form of private-equity fund , still in use today, emerged. Private-equity firms organized limited partnerships to hold investments in which
8064-696: Was a graduate of the Republic of China Military Academy , who later went on to serve as a commander in the Chinese Civil War under Chiang Kai-shek and, in 1948, moved the family to Taiwan , where he retired with the rank of Colonel in 1960. In October 1972, his wife and daughter Elizabeth moved to the New York City area to join Pao's mother and aunt and uncle who were already studying in the US. Pao graduated with an A.B. from
8160-909: Was a professor at New York University 's Courant Institute of Mathematical Sciences . Her mother, Tsyh-Wen Pao ( née Lee) worked as an engineer in computer sciences at the University of Pennsylvania . Pao is fluent in English and Mandarin and first learned to code from her mother at age ten. The Pao family raised their children in Maplewood, New Jersey , where she graduated in 1987 from Columbia High School . Young-Ping Pao died in 1987, during Ellen's final year of high school. Pao's maternal grandparents are Yu-Wen Lee and Ching-Hsin Lee (née Liu), who were from Baoding in Hebei province near Beijing . Pao's maternal grandfather
8256-413: Was an early Hewlett-Packard executive. Byers joined in 1977. It was the very first venture capital firm to open an office on Sand Hill Road and is credited with creating the cluster of venture capital firms in that area. Located in Menlo Park, California , Kleiner Perkins had access to the growing technology industries in the area. By the early 1970s, there were many semiconductor companies based in
8352-468: Was described by Dealbook in 2009 as "one of Silicon Valley's top venture capital providers", and The Wall Street Journal in 2010 called it one of the "largest and most established" venture capital firms. By 2019 it had raised around $ 9 billion in 19 venture capital funds and four growth funds. In May 2012, Ellen Pao , an employee, sued the firm for gender discrimination in Pao v. Kleiner Perkins , which
8448-435: Was fired. A Change.org petition requesting her removal reached 200,000 signatures and on July 10, it was announced that Pao had resigned from Reddit "by mutual agreement". Pao subsequently founded the nonprofit Project Include with Erica Baker , Tracy Chou , Freada Kapor Klein and four other women in the technology industry. Aimed at startups with 25 to 1,000 employees, the group develops human resources advice in
8544-432: Was formed in 1972 as Kleiner Perkins. When Caufield and Byers became partners as well, the name was changed to Kleiner, Perkins, Caufield & Byers (KPCB) in Menlo Park, California , with a focus on seed, early-stage, and growth companies. The firm is named after its four founding partners: Eugene Kleiner , Tom Perkins , Frank J. Caufield , and Brook Byers . Kleiner was a founder of Fairchild Semiconductor , and Perkins
8640-439: Was passed over for a senior partner position. According to Pao, she had the job title of a junior partner from her date of hiring and was promised an opportunity to move into an investing role. Doerr, who has expressed awareness of what he considers a gender gap at venture capital firms, mentored Pao, liberally providing feedback, but, in the end, agreed with the other senior partners who had made negative evaluations of her work at
8736-1255: Was raising funds for a $ 500 million growth-stage clean-technology fund. In October 2010, the firm launched a $ 250 million fund called sFund to focus on social startups, with co-investors such as Facebook , Zynga and Amazon.com . In early 2016, the firm raised $ 1.4 billion in KP XVII and DGF III. The firm has been an early investor in more than 900 technology and life sciences firms since its founding, including Amazon.com , America Online , Applied Intuition , Beyond Meat , Citrix , Compaq , Electronic Arts , Genentech , Google , Glean , Intuit , Lotus Development , Netscape , Shazam , Shyp , Nest , Sun Microsystems , and Twitter . Some current investments include DJI , Handshake, Coursera , Shape Security, Farmers Business Network , Interos, IronNet Cybersecurity, Desktop Metal , Gusto , Plaid , Rippling , Robinhood , Slack , UiPath , Netlify , Loom , Viz.ai, and Looker . Very recent investments include Modern Health, Pillar, Future, TogetherAI and STORD. Kleiner Perkins paid $ 5 million in 1994 for around 25% of Netscape and profited from Netscape's IPO . Its investment of $ 8 million in Cerent
8832-446: Was replaced by Reddit co-founder Steve Huffman . On July 12, former Reddit CEO Yishan Wong , who had previously defended the five bans on Quora , began a series of posts which he referred to as "declassifying a lot of things". The first drew attention to the fact that Victoria Taylor was in fact fired by Alexis Ohanian and not Pao. When shown that the media was covering this post, Pao tweeted "thanks for not blaming me for it". In
8928-404: Was terminated abruptly while Kleiner Perkins claimed that she was given a month to accept a paid five-month transition to an operating role. Pao's lawyer said she was fired in retaliation for her lawsuit and amended the complaint to add that cause of action. The firm said Pao was terminated for performance reasons unrelated to the lawsuit. On March 27, 2015, a jury decided the case in favor of
9024-535: Was the first venture capital firm to open an office on Sand Hill Road in 1972. Throughout the 1970s, a group of private-equity firms, focused primarily on venture capital investments, would be founded that would become the model for later leveraged buyout and venture capital investment firms. In 1973, with the number of new venture capital firms increasing, leading venture capitalists formed the National Venture Capital Association (NVCA). The NVCA
9120-401: Was to serve as the industry trade group for the venture capital industry. Venture capital firms suffered a temporary downturn in 1974, when the stock market crashed and investors were naturally wary of this new kind of investment fund. It was not until 1978 that venture capital experienced its first major fundraising year, as the industry raised approximately $ 750 million. With the passage of
9216-785: Was worth around $ 2 billion when the optical equipment maker was sold to Cisco Systems for $ 6.9 billion in August 1999. In 1999, Kleiner Perkins paid $ 12 million for a stake in Google . As of 2019, the market cap of Google's parent company was estimated at around $ 831 billion. As initial investors in Amazon.com Kleiner Perkins scored returns in excess of $ 1 billion on an $ 8 million investment. The firm currently has five partners managing investments: 37°25′18″N 122°12′41″W / 37.421731°N 122.211275°W / 37.421731; -122.211275 Venture capital firm Venture capital ( VC )
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