A lot has happened in technology venture capital since John Malloy
co-founded BlueRun Ventures (BRV) in 1998. The industry simmered, sizzled
and boiled over.
But with a resurgent M&A market and indications that IPOs are coming off
their long Wall Street probation, institutional investors are seeing the
exits opening up again (although there’s still plenty of risk to go with the
BRV, formerly known as Nokia Venture Partners, recently closed a $350
million fund and is working to build a brand for its new name by
emphasizing startup experts and a global reach.
In addition to its Menlo Park, Calif., headquarters, the firm has offices in
Helsinki, Finland; Herzelia, Israel; London; New Delhi; Seoul; Shanghai;
Tokyo; and Washington, D.C.
While the name has changed, the focus remains. BRV continues to target
early-stage consumer electronics, IT and mobile startups. Initial backing
ranges from $2 million to $8 million.
Malloy recently sat down with internetnews.com to discuss BRV’s
strategy and the potential of specific technologies in the sectors where
Q: Entrepreneurs with strong plans and experienced executives have a lot
of choices for financing. How does BlueRun differentiate itself?
The difference is in our model. We’ve built a global fund. We’ve built a
network of offices in Europe and Asia. We really pick the best of breed and
are geographically agnostic.
For example, we see huge opportunities with
China. We have guys on the ground there. How do you vet [business plans
that originates or is focused on that market]? You have to have connections;
that’s the piece we add.
Q: BRV also invests in consumer electronics, an area many technology-focused fund managers avoid because of the perceived fickleness of
consumers. What’s interesting in that space for you now?
“We invested in a Colorado company called Cornice that makes 1-inch hard
disk drives. A few years ago we thought that Flash [memory] wouldn’t meet
market demand. We thought cell phones would have this need for new memory
storage devices. It’s proven to be a good venture bet for us. Samsung is
using Cornice drives in new 3GB phones.
Q: Let’s talk about some other technologies. Recently, there’s been a
flurry of activity around WiMAX
and standards fronts. What are your thoughts on WiMAX as an investment?
I understand why Intel
is interested in WiMAX, but as an
early-stage investor, I think it’s too early to put dollars into a company
that focuses on WiMAX because an application is not defined.
Q: What about VoIP? BlueRun led
SunRocket’s recent round. With Vonage tipping in with more than 500,000
subscribers and everyone from AOL to MSN to traditional carriers entering the
market, isn’t SunRocket late?
SunRocket executives come out of the MCI of 80s and early 90s. They are
consumer marketing people. Now that the technology is ready, it’s all about
value to the end-user. It’s alternative phone service. Are they competing
with Vonage directly? The answer is they are not competing directly with
Vonage. They are competing with Verizon and others [regional and
There’s going to be multiple [VoIP] choices There’s room for three
significant, independent VoIP-based service providers who have different
ways of attacking the market. [SunRocket’s leaders] know how to build
Q: Is it more likely that VoIP players will go public or be acquired by
traditional service providers?
It’s more likely that these will be public companies. Wall Street will
reward them and the financial metrics will be there. If Vonage was a public
company, it would have a significant market cap, and [potential buyers] are
dealing with diminishing revenues.
Q: How many business plans are you seeing these days? Where are they
coming from and what’s the quality like?
We look at 100 plans a week on average. Globally, the West Coast is the best
single market in the world, but it’s not the only one where we’re seeing
A lot of really interesting entrepreneurial ideas have been percolating for
years. A lot of people are working hard to put together businesses. One
lesson we should take way from the bubble is that the day-trader mentality
is not what it’s all about. You have to be committed to [building a