ComVentures on the Ropes


When TechCrunch put FilmLoop in its “DeadPool,” citing layoffs and poor user adoption, I uninstalled the service from my laptop. I liked the product well enough and had even used it on PEHub, but I’m obsessive about computer clutter, so when TechCrunch pronounced it dead, I deep-sixed the software.

Now more details emerge. TechCrunch writes that ComVentures, a FilmLoop investor, forced a fire sale of the startup to one of its other portfolio companies. The move came at the urging of ComVentures’ limited partners, who wanted the firm to clean out its holdings of unprofitable startups, according to TechCrunch.

Baris Karadogan, an investor at ComVentures, adds his two cents to the comments section, reminding TechCrunch readers that nine out of every ten VC investments fail. Bessemer Venture Partners GP David Cowan weighs in as well, saying it is unlikely the VCs had coercive power sufficient to do what TechCrunch reports them to have done.

The death of a single startup is always an interesting story to follow, but what does this story mean for the health of ComVentures? The firm raised a $300 million fund in 2005, so it’s hard to imagine its limited partners being too anxious for the firm to wrap up its unprofitable startups. In fact, one might expect the majority of its portfolio companies to be unprofitable.

The firm had just one exit in 2006, according to Thomson Financial, publisher of PEHub.com. It sold business communications company Ascendent Telecommunications, which had raised $20 million from VCs, for an undisclosed value in March.

ComVentures sold three companies in 2005, according to Thomson Financial. It sold Kagoor Networks, which had raised $40 million from VCs, for $67.5 million. It sold RLX Technologies, which had raised $99 million from VCs and Sarvega, which had raised $23.5 million from VCs, each for undisclosed amounts.

The firm’s website underwent a facelift last year and is trying to drop its history of communications deals in favor of early-stage Internet startups. It has lost a couple of partners since it was founded, but re-staffed its team during 2006, adding Baris Karadogan and Keyur Patel as partners.

So is the firm healthy or in trouble?

Perhaps the most telling detail is the firms ComVentures does the most deals with. Its top three partners are Sevin Rosen Funds, which it has invested next to in 22 rounds, Crescendo Venture Management, which it has invested next to in 19 rounds and Worldview Technology Partners, which it has invested next to in 18 rounds.

Sevin Rosen announced it was not going to raise its next fund. Crescendo has jumped through a bunch of hoops trying to raise its next fund. Worldview gave up on its fifth fund last year due to its poor returns.