Sign of the Times: Secondary Firm Is Most Active VC

In yet another indication of how tough the venture market has become, the most active investor in April was none other than secondary investor Millennium Technology Ventures, according to preliminary investment data gathered by Thomson Reuters (publisher of peHUB). I’ve been compiling a monthly “most active” list for Venture Capital Journal since 2002, and this is the first time in my memory that a secondary firm ranked No. 1 on the list.

Our data show that Millennium invested in seven companies in April, beating out the likes of Sequoia Capital (five companies), Kleiner Perkins Caufield & Byers (four), Benchmark Captal (four), and Accel Partners (three).

Mind you, these data are preliminary. Thomson Reuters and the National Venture Capital Association survey venture firms at the end of each quarter and produce an official report at that time. So, the figures I’ve quoted will likely change. But even if Millennium gets knocked out of the No. 1 spot after the second quarter data are compiled, it will no doubt be among the most active investors for the month of April.

Here are the companies Millennium backed last month: DataPipe, Inc., a provider of managed security and hosting services; eHarmony.com, an online dating site; Facebook, a social network; Fonality, a provider of open-source Internet phone service for small businesses; LiveOps, a call center solution provider; Rearden Commerce, a provider of on-demand assistants for business management; and Zappos.com, an online shoe retailer.

It’s worth noting that Millennium is different than most other secondary firms, which focus on buying startup stakes from limited partners or venture firms. Millennium focuses on providing liquidity to a startup’s employees. Taking that into account, it appears that a growing number of startup employees would rather have cash in their pocket now than continue to wait for a presumably bigger payoff when a company goes public or gets acquired down the road.

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