McNamee Promises to Make Seed Investments from Buyout Shop Elevation Partners
What’s up with Roger McNamee and Elevation Partners?
This 29-year investment veteran and Elevation co-founder vows he will go seed stage. Yup, that’s the same private equity firm presently making “large scale investments in market-leading media, entertainment and consumer-related businesses.” So what’s afoot?
McNamee discussed his new approach late last month during an address to the Paley Center for Media, a Los Angeles-based forum. He acknowledged having changed his focus several times during his career. Apparently the time is right to shift again.
“I’m doing another 180-degree turn,” said the Elevation managing director, who also co-founded buyout shop Silver Lake Partners and plays rhythm guitar in the rock band Moonalice (he’s third from the left in the photo). “I’m going into seed investing now as part of Elevation.”
Of course that also means a 180-degree turn for the Sand Hill Road firm, or at least a 90-degree one. Elevation does growth stage now, but in the future, “we’re going to do them both,” McNamee told the Paley Center audience.
It isn’t clear if McNamee or his fellow general partners have informed Elevation’s limited partners of this directional change or whether the change will require an amendment to the LP agreement for the firm’s most recent fund. Among the firm’s LPs are organizations such as the Colorado Public Employees’ Retirement Association, the Pennsylvania State Employees’ Retirement System, the Washington State Investment Board and the Teachers’ Retirement System of the State of Illinois, according to Thomson Reuters (publisher of this blog).
PeHUB sought comment from McNamee, but has not heard back.
In his talk, McNamee appeared anxious to seize emerging opportunities that he expects will be created by significant changes in the technology market. Some key changes he noted:
- Microsoft’s monopoly on Internet connected devices is eroding, with its once 95% share (with Windows based PCs and devices) now under 50 percent.
- Google’s market position is similarly a “very difficult situation.” Its success with PC search hasn’t yet transferred over to mobile, where Google search is far less important.
- Apple’s iPad is becoming the new user interface, bringing with it the potential for Apple to become the powerhouse IBM was in the 1970s.
- HTML 5, the latest version of the programming language for the Web, is democratizing the Internet.
McNamee said the new landscape is opening the door for small companies. “In tech, people get blown up by startups,” he said during his speech. “I’m going to do what I call full-contact investing.”
That means focusing on the cloud and the new multi-screen landscape of large and small devices. Less clear is the impact on Elevation, which according to the firm’s website has capital commitments of $1.9 billion and targets investments of $50 million to $300 million.
Elevation’s portfolio includes Facebook, the behemoth social network; Forbes, publisher of magazines and other media products; MarketShare, a business analytics company; Move (NASDAQ: MOVE) an online real estate company; SDI Media Group, a localization services provider for media and entertainment companies; and Yelp, a website where consumers posts reviews of restaurants and other local businesses.
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