For more than five years, Palmeri largely worked in the background as a managing director at Minor Ventures, Halsey Minor’s defunct venture firm. Now Palmeri is out front at his own San Francisco-based firm, MkII Ventures, which is in the market for up to $10 million. And he’s gaining traction. Among the investors backing MkII are SV Angel, Crunchfund, Pacific Partners, and Bloomberg Beta, the new venture capital firm out of Bloomberg.
MkII isn’t an exact replica of Minor Ventures, though there are plenty of similarities. To wit, MkII’s primary objective is to create, shape and fund companies, as was Minor Ventures. But whereas Halsey Minor aimed to fund Minor Ventures’ companies exclusively, MkII is set up as an operating company, one that seeks outside investors for the companies it launches. (“As a company takes off, a bunch [of its returns] will go to investors,” Palmeri says, but some percentage will become “recycled” by MkII, allowing it to form more startups.)
Founded in 2010, the mostly bootstrapped MkII already has two startups fully up and running. The first, a company in the “VoIP messaging space” and which was founded by Slovenian entrepreneur Tomaz Stolfa, will publicly launch this fall.
Stolfa previously founded vox.io, an online chat service. Palmeri says that after meeting Stolfa in New York last year, he convinced Stolfa to move himself and his team to San Francisco. The new company has since raised $1.5 million from investors, including a small percentage from Palmeri.
MkII is also behind Prism SkyLabs, whose software analyzes what’s being recorded by retailers’ video cameras to give them actionable feedback about their customers. The two-year-old company — which Palmeri co-founded with video intelligence expert Steve Russell – has already raised $10 million, including from Crunchfund, Data Collective, and Andreessen Horowitz. Now the company, which Palmeri says is “probably worth about $80 million,” is “looking at doing a Series B” round.
Back in 2004, Minor plucked Palmeri out of one of his failed endeavors to oversee Minor Ventures’ day-to-day operations. “No one but Halsey would have allowed me to do that at that point,” says Palmeri, seated in a quiet café in San Francisco’s Richmond neighborhood. But while Palmeri is quick to lavish praise on his mentor, he also wants the world to know he did more than just execute on Minor’s visionary ideas.
In fact, Palmeri says he was instrumental in several of Minor Ventures’ biggest successes. GrandCentral Communications, which sold to Google in 2007 for roughly $65 million, may be the most notable among them, given that it was Minor Ventures’ first exit. The deal also put the firm — which eventually turned investments of $22 million in seven startups into a $140 million return — in the black.
Before the company came to pass, recalls Palmeri, Minor was considering writing a check to an older voice communications company, RingCentral, which has raised about $44 million over the last decade. Palmeri argued that investing would be a mistake, because RingCentral “was based on hardware, and you can’t scale hardware from a cost standpoint like you can software. I said, ‘I think we should do our own thing.’”
Minor might have ignored Palmeri. Instead, he listened, allowing Palmeri to “construct the entire approach we took with GrandCentral, from finding [GrandCentral founder] Craig Walker [a communications executive with whom Palmeri had worked in the past], to negotiating the startup’s equity structure.” Adds Palmeri: “Halsey would have invested $5 million in RingCentral and owned 14% of that company. Instead, for $4 million, we owned half of GrandCentral.”
Minor is exceedingly generous when asked about Palmeri’s role in several of Minor Ventures’ companies. “Ron is amazingly talented,” he said via email. “He is an entrepreneur and an investor all rolled into one. He deserves enormous credit for everything that happened at Minor Ventures. We would never have been as successful without him.”
Besides GrandCentral, Palmeri said he played a critical role in creating the Internet network security service OpenDNS, a fast-growing company that was launched within the glass-lined walls of Minor Ventures. Palmeri says it was he who recruited “world class CEO” David Ulevitch to run OpenDNS, when Ulevitch was a systems administrator at another startup. Palmeri also says that it was his idea to build the service, adding that “David was the guy who, at that stage, nobody would have given him a $2 million check.”
When asked about Palmeri, Ulevitch writes in an email that “Ron undeniably deserves more credit for his efforts than he received at the time. It’s also possible he reached out to me, though Halsey was a part of the recruitment process. And it wasn’t like I was hard to find, I was already running a large DNS company,” the startup EveryDNS, which was acquired for undisclosed terms in 2009.
Talking over coffee, Palmeri takes pains to give Minor credit for doing far more than writing checks. He talks at some length about Minor’s design prowess, as well as what he learned from the experience, including that startups do far more with less. Palmeri also acknowledges Minor’s unwavering enthusiasm. “The thing I liked about Halsey was I could say, ‘Holy sh&t, this is amazing; we should do something.’ And he was like, ‘Yeah. Go.’”
Palmeri shrugs. “It isn’t so much that I want to say that I did everything and [Minor] did nothing,” he says earnestly. “It’s just that I did a lot.”