As VC manufacturers go, Rothenberg Ventures has seen higher days.
The agency constructed up a fame as an up-and-coming early-stage investor a number of years in the past, primarily based on daring bets on digital actuality, a flashy advertising technique and its well-connected namesake and founder, Mike Rothenberg. Between 2012 and 2016, the San Francisco agency participated in funding rounds for greater than 100 early-stage corporations, generally investing alongside top-tier VCs.
However Silicon Valley soured on Rothenberg Ventures final 12 months, amid fees that its founder spent past his means, did not pay employees and misappropriated investor funds for a aspect challenge. Lawsuits ensued, together with a reputation change (since modified again), an SEC investigation and a variety of unflattering profiles casting the now 33-year-old Rothenberg as a form of modern-day Gatsby.
So it hasn’t been a superb 12 months for Mike Rothenberg. However what in regards to the Rothenberg Ventures portfolio?
In an effort to see how firm- and investor-specific scandals would possibly have an effect on portfolio corporations, Crunchbase Information took a have a look at the efficiency of Rothenberg Ventures-backed startups. We checked out exits and up rounds, in addition to closures and obvious down rounds.
Total, the Rothenberg portfolio appears to be doing nicely. It’s seen a number of exits at what seem like favorable returns, a variety of up rounds and never too many high-profile flops. It in all probability helps that almost all portfolio corporations had a variety of different buyers. The overwhelming majority that raised money from Rothenberg Ventures did in order half of a bigger investor syndicate, and people startups weren’t counting on the agency as a significant supplier of follow-on capital.
With that in thoughts, right here’s what the portfolio seems like now.
Not less than 13 Rothenberg-backed corporations have gone on to exit, in response to Crunchbase information. Level-of-sale techniques firm Revel Methods bought a majority stake to non-public fairness agency Welsh, Carson, Anderson & Stowe.
All the exits had been by acquisitions, and most of these exits concerned early-stage corporations promoting for undisclosed quantities. Sometimes, Rothenberg was a non-lead investor in a syndicate for these startups. Most had raised a number of million previous to exit, although a number of had raised bigger rounds.
A few acquisitions concerned corporations that had already stopped providing their companies.
Typically talking, if an early-stage firm that’s not identified to be in misery will get acquired, backers become profitable. This appears to be the sample for many of the Rothenberg portfolio firm acquisitions thus far. The checklist contains Candy IQ Analytics, a supplier of native search instruments that bought to Gannett; Payable, a supplier of software program for paying contractors that bought to Stripe; and Propeller, a platform for updating apps that bought to Palantir. One of many few offers with a disclosed worth was a celebrity-heavy funding, Howdy Giggles, a women-focused on-line media startup that bought to Time for $30 million in 2015. (You’ll be able to view the complete checklist of acquisitions right here.)
A few acquisitions concerned corporations that had already stopped providing their companies. AltspaceVR, a social VR platform closed over the summer season, was snapped up by Microsoft in October. And Luxe, a valet parking app, had additionally shut down earlier than it bought to Volvo in September.
To date, the agency’s massive bets on digital actuality have but to supply profitable exits, although some have raised follow-on rounds, which we’ll have a look at subsequent.
Seed investments take a very long time to mature, so it’s not stunning to see the vast majority of viable portfolio corporations nonetheless in follow-on fundraising mode.
To this point, the Rothenberg portfolio has a variety of corporations which have gone on to boost a lot bigger follow-on rounds, presumably at marked-up valuations. We assembled 30 of them right here.
The portfolio contains some unicorns. Mike Rothenberg mentioned there are three corporations within the portfolio which have surpassed the $1 billion valuation mark, however didn’t title them. It appears clear wanting on the agency’s checklist of investments that one unicorn is RobinHood, the zero-commission platform for getting shares, which raised its final spherical at a $1.three billion valuation. The agency is a non-lead investor and certainly one of a minimum of 28 identified backers.
The most important exits and largest flops are in all probability but to return.
It’s unclear whether or not SpaceX counts as one of many unicorns. Rothenberg invested in a 2012 Sequence D, however SpaceX already had a multi-billion greenback valuation on the time, (though its worth has since multiplied). We couldn’t establish a further potential unicorn, so in all probability we both missed it or it’s an organization whose billion-plus non-public valuation hasn’t been publicly disclosed.
There have been additionally a variety of corporations that raised early-stage funding from Rothenberg which have secured considerably bigger follow-on rounds prior to now couple of years. Among the greater ones are Patreon, an internet platform for sponsoring artists; 8i, a VR software program developer; Andela, a instrument for locating African tech expertise; and Rinse, a garment care service.
Most seed-stage startup efforts don’t finish in success, so we’d count on that any agency working this stage for a number of years would have some flops.
Rothenberg is not any exception. Crunchbase turned up a number of portfolio investments that raised small sums a number of years in the past and have since closed, like Butter, an app for making new buddies; Buttercoin, a Bitcoin startup; and Bloodhound, an app for managing leads at commerce exhibits. There are actually extra, although placing collectively a full checklist is difficult, as many startups favor to quietly fade away moderately than formally announce their closure. Additionally, seed buyers generally don’t disclose all their micro-investments, significantly for stealth startups.
The agency’s most high-profile probably troubled asset is River Studios, a digital actuality manufacturing home Rothenberg launched in 2015. The funding got here below hearth final 12 months, with Wired and different publications reporting that River hadn’t been correctly green-lit by buyers, misplaced cash and was behind on lease.
The present standing of River Studios is unclear. Its weblog hasn’t been up to date since mid-2016, and there are not any open positions listed on its website.
Total, the takeaway appears to be that Rothenberg Ventures’ downturn hasn’t prolonged to its portfolio corporations in a significant manner.
The agency’s efficiency appears just like these of different funds of the same classic and strategy. That’s, it’s largely what we’d count on from a well-connected Silicon Valley angel or VC collaborating in giant investor syndicates for decent seed and early-stage startups in scorching sectors. Rothenberg was considerably of an outlier in its heavy deal with digital actuality, a sector that continues to draw cheap funding however has but to supply fats exits. VR hasn’t produced any massive outcomes for Rothenberg, both — but.
Given the long-time horizons that seed-stage startups require to mature, nevertheless, it’s nonetheless early innings for the majority of the portfolio. The most important exits and largest flops are in all probability but to return.
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