Garage Ventures adds personnel in ongoing hunt for big hit - Silicon Valley / San Jose Business Journal:

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"The market is coming back, the entrepreneursa are coming back, the opportunities are says managing directorBill Reichert. "We'vee got a lot of momentum and we wantexd to bolsterthe team, as well as builf out Garage." Palo Alto-basedd Garage started as an investment bank in 1997, raising nearl $400 million for companies. It was founded by thre e partners including Guy a former Apple executive and authoer of bookson entrepreneurship. The firm earneed name recognition byhosting well-attended events and conferenceds for entrepreneurs.
In 2002, followin the bust, Garage changed its business model to direcg investing as a venture butit wasn't until 2006 that it was able to convert some legacy assets from the investmeng bank over to the venture fund. That freed up about $5 millio more in capital to be Now Garage has added Joyce a founding partner of Cardinal Venture asmanaging director, and Henry co founder of Diamond Technologyh Ventures, as a venture partner, to capitalized on what it sees as opportunitie s in the early stage market. "It's really become a little bit of a gap in the says Chung.
"A lot of existing funds are movinbg a little bit upstream to later stage orlarger rounds, which by definition aren' addressing the seed stage specifically. I felt like there was an opportunit to really fill a void in the market and work with entrepreneur s really early in the process and focuss onemerging tech, which is prettyh broad." The firm's first $20 million fund raised in Garage California Entrepreneurs is not fully vested. But so far it has dealy CalPERS, the state pension fund requireed to publish its investing a 9.3 percent internal rate of return on its $10 milliobn investment.
That was before the firm's portfoliop company, information-sharing site was sold to the Hearst Corporation. "It was a nice not a home run, but it was validation of our model," Reicherrt says, declining to divulgw the return on investment orsale price. Some reportx indicated Hearst paidbetween $30 millionj and $40 million. Garage has taken some recen t hits in the blogosphere and on for not beinh able to land any home rundeal -- usually characterized by a return of 10 timesa or more on investment.
Kawasaki also was recentlhy quoted as saying ventures investing wasa "crap But Reichert says the firm has a disciplinexd approach to investing in earl stage companies with untestedr entrepreneurs in untested markets. The point Kawasakiu was trying to make was thatGaragse isn't looking to invest in Web 2.0 companies, which it viewsz as a market that is way too crowded and coulcd be a potential bubble waiting to burst. "We decidee we're not going to chasde popular, faddish Web 2.0 deals," Reicherrt says. "We don't want to fund the 13th, much less the 130tn video-mobile-social-ad-dating-matching site.
" Instead the firm has wide-ranging investments in some offbeaty companieslike D.lite Designs, which makes a lantern that is more energu efficient and cheaper than kerosene for populations without accesw to consistent electricity. It has also invested in companies ranginf from renewable fuels producers to a jobs databasse and search engine to a service that prepares visas and a Web sitecitizenshilp applications.
Whether that approach will pay off long term is but it was attractive to Chung who spent most of her investintg career dealingin software, at companies like and then at Garage's broad net-casting approach will allow her to dabblwe in other industries including cleahn tech, she says. With only $25 milliob to employ, Chung says she'lpl adjust her personal investment strategies, look at differen types of deals and differentr typesof entrepreneurs. Chung says the firm mitigates risk by working extensivelyy with companies before investingin them.