Benchmark Capital Likely to Invest in Public Companies

Two weeks ago, Benchmark Capital sent a note to its entrepreneurs, warning that the recent downturn in the public markets meant bad news for startups, too, including less access to other forms of capital like angel and debt funding, lower valuations, and, likely, some hard decisions around headcount.

Turns out the financial crisis is prompting Benchmark itself to do things a little differently. To wit, the firm — which invests in Series A deals roughly 70 percent of the time — is looking to seize on depressed stock prices by investing in PIPE deals for the first time in its 13-year history.

“Our first priority right now is helping our companies by giving them the information and tools they need,” general partner Bill Gurley told me a little earlier today. At the same time, he said, Benchmark, which closed on a $500 million fund back in March, is “cognizant of public company valuations falling, so we’re been talking to some about whether they need funding.”

Benchmark has even talked with some of the many public companies that were once in its private company portfolio — though Gurley declined to discuss Benchmark’s targets in further detail.

Added Gurley: “It’s like Warren Buffet has famously said: you want to be greedy when other people are fearful, and fearful when other people are greedy. People are very fearful right now.”

More from our conversation — including what the downturn means to Benchmark’s consumer-centric startups, and why Gurley and famed banker Frank Quattrone are of like minds — later today.