Kleiner Perkins & Mary Meeker: The (Venture Capital) Future is Female

After the class last week discussing venture capital, I wanted to tie the topic in to my blog post. I have studied it in previous classes, specifically Sequoia Capital and Don Valentine, which both are exactly what come to mind in terms of venture capital. However this week, I want to discuss a rival venture capital firm, Kleiner Perkins Caufield & Byers, which made headlines very recently announcing plans to split the firm. The growth-stage team, which makes large investments into companies on the brink of IPO’s, will break away from the early-stage investment fund, which focuses on young startups.

Firm Background

First off, I want to give you some insight into how Kleiner Perkins became an investing powerhouse in the Silicon Valley. The Silicon Valley-based firm founded in 1972 initially focused on early stage ventures and has since then grown to include a growth-stage fund. They primarily invest in technology and life sciences startups. Some of the most notable companies that Kleiner Perkins has invested in include Amazon, AOL, Google, Electronic Arts, Sun Microsystems, and Netscape. The companies they’ve invested in have gone on to create over 250,000 jobs, over $100 billion in new revenue, and over $650 billion in market capitalization.

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The Transformation of KPCB

The firm will now primarily focus on the early-stage startups which is how the firm gained its reputation in the first place, making bets on giants Google and Amazon. This change in the company’s organization are reflective of how the world of venture capital has changed recently. With unlimited funding opportunities along with startups staying private for longer periods of time, Kleiner Perkins has struggled in managing their positioning as a firm. This was the reason behind initially adding the growth fund to tap into the market of large startups nearing IPOs. However, this addition has created tension at the company over whether to focus on the early-stage fund versus the growth stage fund. There became disputes over whether the growth stage team would invest in the early stage fund’s ventures. In addition, these internal conflicts have caused other firms to outshine Kleiner on early stage investments which was the fund’s initial specialization.

On Friday, September 14, Kleiner Perkins told their limited partners how the growth-stage investment team will be breaking away from the firm. This surprising yet greatly-needed decision is an effort to have teams that explicitly focus on specialized investing stages. Mary Meeker, who joined Kleiner Perkins as part of their growth team in 2010, came from Morgan Stanley and is well known for her annual Internet Trends Report, which is heavily referred to by investors. This year it hit on several trending factors in tech such as data and personalization, e-commerce innovation, and China’s rising interest and impact in the internet markets. Since joining the Kleiner Perkins team, she has been vital in making several key late stage investments including Uber, Square, Spotify, and Peloton, Now she, along with a few other Kleiner Perkins partners, will split to create a separate growth fund and will raise their own capital.

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Mary Meeker

It’s exciting to hear about notable female executives in Silicon Valley. However, it is extremely rare to hear about them in venture, specifically. And I have to say Mary Meeker is someone who has definitely made a name for herself. Nicknamed “The Queen of the Internet” she has made an immense impact on both Wall Street and Silicon Valley.  She made herself known by covering internet stocks and specifically, her support of risky internet stocks in the early 2000s. While at Kleiner, she has been a successful backer of later stage startups such as Snap, Twitter, Facebook, and Spotify. Now she is set to lead a new venture capital firm along with three other partners from Kleiner Perkins. This opportunity will allow her and her team to focus on mature tech start-ups, as well as seek international opportunities.

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Aside from the strategic reasoning behind creating her own fund, I do question other reasons why she has decided to go her own way. Kleiner Perkins has come under scrutiny regarding sexual harassment allegations in the past with the Ellen Pao vs. Kleiner Perkins case. Women, specifically in high positions, have depleted quickly at the firm, and with Meeker’s departure from Kleiner Perkins, there will be no more female general partners. However, the firm has stated, even before Meeker’s departure, that hiring a new female general partner is currently the top priority at Kleiner Perkins.

The Future of Venture Capital

Venture Capital has greatly changed over the last few years. Larger checks are written early on in seed rounds and Round A, and venture capitalist input is heavily needed in the startup development process which requires specialization and time. In addition, it is easier now than ever to start a company, which has made it increasingly difficult for venture capitalists to discover the next major success. In the next 5-10 years, it is expected that we will experience some sort of recession, and this will indeed, have a major impact on how venture capitalists can invest their funds as well as execute exit strategies.

 

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9 thoughts on “Kleiner Perkins & Mary Meeker: The (Venture Capital) Future is Female

  1. Insightful analysis on KPCB. With a resume like hers, I would predict that Mary Meeker’s new firm will be highly successful. If I were an entrepreneur, I’d certainly value her insights and desire her input on where my startup could fit into her Internet Trends report. It is troubling that KPCB now has no female partners. Firms can talk a big game when it comes to diversity being a number one priority, (like Uber when it came to replacing Travis Kalanick) but it really should be of utmost importance to achieve diversity of perspective and experience at VCs. It could be the difference between investing or passing on the next unicorn.

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  2. I was interested to hear about Mary Meeker’s departure from Kleiner. I’m hopeful that she will make a big impact in her new firm, and maybe establish new ways of doing business in the VC space. I have found True Ventures (a firm that we visit on Tech Trek West and will be on campus in a few days) also have a strong and inclusive culture.

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  3. Thanks for sharing, Maddie! It is definitely a sad reality that there is such a lack of female representation in VC, especially since everyone is aware of the problem, yet we are still waiting to see any dramatic changes. It will be interesting to continue to follow up with Mary Meeker’s new fund and how they are respected and treated by established venture capitalists; it seems like she is the female guinea pig. Since she is already so well known, hopefully Meeker can be a tangible example of a successful woman leader in VC. Like you said, the future is female! Great post!

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  4. Great job Maddie! I think the lack of women in Silicon Valley and venture capital is such an important issue and I’m so happy that you’ve highlighted one important figure for change in the space. I believe that it really only takes a few powerful women in VC and Silicon Valley to begin the shift from a male dominated culture, and she surely is one of them. Hopefully she inspires young women out there to follow in her footsteps!

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  5. Nice post Maddie! I had not heard of Mary Meeker prior to this post, so I really enjoyed reading your post. After reading Lean In by Sheryl Sandberg, I have become much more aware of the lack of women in executive positions or in certain fields, like venture capitalism. It is great to hear that Kleiner Perkins is actively looking for a female partner, as we are all aware of the positive impact diversity has on organizations and their innovation.

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  6. Awesome post, Maddie! I had only heard Mary Meeker’s name briefly and in passing so it was great to learn some more about her! I’ve become very interested in the stories of female executives in the tech industry, and it’s great to get to know more about a powerhouse one in venture. I think it’s fantastic Meeker wants to move on to start her own firm and I’m hopeful that they will hire a new female GP to help diversify not only the firm, but also their perspectives. Thanks for sharing!

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  7. Love to read about women in VC who are able to establish themselves and create a culture that is more accommodating towards inclusivity. I am excited to see how Mary Meeker’s new company will do, and I highly respect the hard work and dedication she has put in to make a name for herself in the Silicon Valley and beyond. Great post!

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  8. Loved this post, Maddie! Another powerhouse female VC (and one of my idols) is Amy Errett, founder of Madison Reed and now part of the True Ventures team. Before she started Madison Reed, Amy was also a General Partner at Maveron and ran the Bay Area office!

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  9. I wonder if the spin off firm will focus more on giving opportunities to women as it is led by such an influential figure as Mary Meeker! It is interesting that she sees the benefit in investing in later stage companies. In light of our discussion on the increasing ease of entry into the tech world, I would agree that waiting until the losers have fallen away and the number of companies that are investment possibilities has decreased is a more secure option when so many companies fail. Thanks for touching on this topic!

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