It feels like the dawn of a new era at Vulcan Capital. The private investment group, which manages billionaire Paul Allen’s personal and professional holdings, has been very private—until now, it seems. Coming off a series of high-profile successes (like BiPar Sciences, a $100 million-plus return on $13 million investment) and failures (like the Charter Communications bankruptcy), Vulcan Capital looks to be opening up a bit to the innovation community and the general public.
From the outside, at least, this is a big deal. The Vulcan Capital team has backed some of the most interesting early-stage startups around the country, and around Seattle—including AltaRock Energy, Evri, Gist, Redfin, and Smith & Tinker. But they’ve never been ones to talk to the press about exactly what they’re doing and why.
So Luke and I were excited when Vulcan Capital hosted our visit to company headquarters near Seattle’s International District this week. We sat down with Chris Temple, Vulcan Capital’s new president, and Steve Hall, the managing director who heads Vulcan Capital’s venture investments (he’s also one of the judges for Xconomy’s upcoming Battle of the Tech Bands).
Hall, who could almost pass for a cleaner-cut Mark Wahlberg, has been a venture capitalist since 1998. He got his start with Prospect Street Ventures in New York, where he funded About.com and a number of other successful Internet software startups. Before that, he was an entrepreneur and an attorney. Hall originally came to Seattle in 2002 to work with Allen. Meanwhile, Temple arrived at Vulcan last year from Tailwind Capital in New York, and was promoted to president of Vulcan Capital just this month.
In a rare in-depth interview, Hall and Temple gave us a sweeping overview of the Vulcan investment strategy—with some deep dives into various technologies and specific companies (more on that soon). They told us Vulcan Capital’s venture team has invested $115 million in 20 companies since 2003, and has helped bring in $700 million of additional capital from other investors. They touched on the “new” Vulcan vs. the “old” Vulcan, the importance of early-stage investing and forming syndication partnerships with other venture firms, and what the real opportunities are in the Seattle area and beyond. “This is one of the first conversations, since I’ve been part of the venture effort, that we’ve said what we’re doing, how we’re doing it, and why we’re doing it,” Hall says.
Here is an edited version of our interview:
Xconomy: How is it different being an investor with Vulcan Capital, as opposed to a venture firm with a network of limited partners?
Steve Hall: I’ve done both, it’s very different. This is Paul Allen’s investment vehicle. It’s his money. Every one of these deals I’ve done since I’ve been here, Paul has been integrally involved with the decision. Not only getting involved in the first place, but probably 50 follow-on transactions over the course of the years. I view that as a great benefit to us. You have someone with a diverse worldview, with many, many areas of technology, a strong understanding of science and bioscience. His intellectual curiousity and understanding of such a wide range of disciplines is very helpful, particularly as we set up to invest in early stages.
I view working with a single investor as a great value add, when they’re actively involved in the decisions. He’s not, in most cases, sitting on the boards of these companies or in product sessions with these companies, but he’s certainly involved as an investor with us. In a couple of cases, like with Evri, which we incubated here, Paul was involved in the conceptual level, whiteboarding what it was we were going to build there. Similarly, we incubated Gist, and Paul was involved.
Chris Temple: I was introduced to Paul by my predecessor, Lance Conn, who recruited me out here. It’s obviously an interesting time to be changing jobs. Most of my background is in private equity, partnership based firms, not broad investment portfolios in large family offices. Paul is a fabulously complicated, smart, interesting guy. He’s got so many different elements and perspectives.
To think about it from a VC perspective, you’ve got a guy who knows how to code software. He’s a guy who designed user interfaces for commercially successful products, foresaw the PC revolution, and is a consumer and investor, rolled all into one at the table. It’s not like you sit down across the table from one person who has one perspective. In Paul’s case, he has all those experiences rolled into one. All in all, it’s rewarding, but it can also be challenging. In that, he can follow up a question about how or why a piece of software was engineered this way, or how it should look on the screen that way, as to how you’ll roll out a product and get it adopted through a certain distribution channel. There’s no way to get soft goals.
X: How much of the Vulcan Capital portfolio do you allocate towards venture, versus other kinds of asset classes?
CT: There’s not a hard and fast rule. There are three legs to the stool at Vulcan Capital. Venture is one of them. We have a more-mature-company, private equity effort, and we have what we call
