According to a new WSJ report and confirmed subsequently by TechCrunch, Bill Gurley, among the most famous of Silicon Valley’s venture capitalists, is stepping way from Benchmark, the early-stage venture firm that was founded in 1995 and which Gurley joined soon after, in 1999. He will not be investing the firm’s 10th venture fund, which is reportedly targeting $425 million in capital commitments.
Gurley’s segue out of the firm won’t surprise many. Benchmark — which has always run a fairly small operation — has routinely groomed new investors as veterans of the firm have moved on. When Benchmark raised its last fund — another $425 million vehicle in 2018 — it parted ways with Mitch Lasky and Matt Cohler, who’d joined the firm in 2007 and 2008, respectively.
The firm’s cofounders — Bob Kagle, Kevin Harvey, Andy Rachleff, and Bruce Dunlevie — also stepped away years ago from actively investing on behalf of Benchmark, with Kagle saying in 2011 that he wanted to sail more, while Harvey got into the wine-making business, where he has since developed at least seven estate vineyards from Santa Cruz to Mendocino under his company’s brand, Rhys Vineyards.
Each continues to list himself publicly as a general partner at the firm, to maintain ties, and, on rare occasion, to represent Benchmark on a board of directors as happened with Dunlevie, who joined the board of 10-year-old WeWork when Benchmark led the company’s $17 million Series A round in 2012. (Dunlevie is now part of a special committee of WeWork’s board of directors that is suing SoftBank for alleged breaches of contract related to its recent decision to cancel a $3 billion tender offer for WeWork shares.)
Still, Gurley’s presence will be missed. He is the longest-standing partner of Benchmark and certainly the highest profile, thanks partly to an active presence on Twitter, along with Gurley’s highly regarded blog posts and, earlier in his career, a regular column with Fortune magazine.
He is also credited with some of the firm’s most lucrative investments, including, most profitably, a $10 million Series A bet in 2011 on a then-nascent Uber — a deal that has gone on to produce many billions of dollars in returned capital to Benchmark’s investors.
The deal also sullied Gurley’s reputation to an extent, after Gurley — who sat on Uber’s board — engineered the 2017 ouster of Uber’s cofounding CEO, Travis Kalanick. At the time, the manuever raised questions both about how founder friendly Benchmark is and also why, if Uber was being mismanaged, Benchmark waited so long to take action.
In the meantime, partly because Uber took its time in becoming a publicly traded company, Gurley had become renowned in recent years for warning founders to take their companies public sooner — and to stop spending frivolously.
At a Goldman Sachs technology conference in 2018, for example, he cautioned — not for the first time — that easy money was making founders less and less accountable to their investors while also driving up valuations to undeserving heights.
“Watch out,” he’d said on stage. “It’s a dangerous time.”
As the most senior member of Benchmark, Gurley has been credited with maintaining the firm’s unwavering focus on early-stage investments, turning down hundreds of millions of investing capital to raise fund after fund in the range of $400 million while other firms have established bigger and more numerous funds to manage.
In 2016, Gurley marveled at the trend in conversation with this editor. “It’s not just the size of the funds but the velocity” at which VCs are returning to their investors, he said at the time. “The Kauffman fund said that billion dollar funds sucked, then everybody went out and raised billion-dollar funds.”
Benchmark itself raised one $1 billion fund during the go-go dot-com days, after an investment in eBay established the young outfit as a top firm. But Benchmark quickly reverted back to smaller vehicles, deciding it was mistake.
We reached out earlier today to Gurley for comment on his plans. In the interim, a source confirms that Gurley, whose 11 board seats include those of e-tailer Stitch Fix, cyber security company HackerOne, and neighborhood social network Nextdoor, will keep those seats.
Other general partners at Benchmark include its newest hire, general partner Chetan Puttagunta, along with GPs Sarah Tavel, Eric Vishria, and Peter Fenton.
In Gurley’s absence, Fenton will become the most senior partner on the team, having joined Benchmark in 2006 from Accel, where Fenton was an investor previously.
According to the WSJ, Benchmark will up be able up to invest one-fifth of the fund it is raising in public companies or more mature, later-stage companies. Sources tell the WSJ that the move reflects the current coronavirus-impacted environment, wherein later-stage and publicly traded companies have seen their values plummet despite what may be strong fundamentals in many cases.
However, a source close to the firm tells us that Benchmark has always maintained the option to pour 20% of its capital into mature private companies, as well as public ones.
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