Chris Moore is an increasingly rare breed. At the founding of Redpoint Ventures 17 years ago, Moore joined as an associate and unlike todays associates who often are cycled in and out of venture firmshe was made apartner. Since then,Moore has leddeals in numerouscompanies that have gone on to sell for sizable amounts, including Auditude, acquired by Adobe; Right Media, acquired (and later shut down)by Yahoo; Efficient Frontier, acquired by Adobe; and Blue Kai, acquired by Oracle.
He also led Redpoint intoRefresh, acquired earlier this year by LinkedIn for undisclosed terms.
Earlier today,before leaving Redpoints Sand Hill Road office for the long weekend, Moore talked with us about what hes seeing in the market right now and why it feels like its in flux. More from that chat, edited for length:
TC: Were sort of confused about whats happening out there these days.
CM: I know, it isnt really clear rightnow which way the market will go. We had a real run-up last year and the year before, with lotsofmoney coming into the system and momentum investing and all the unicorn hoopla. Then, late last year, it started to feel a little more discriminate, I think in part because the funding ecosystem was just getting exhausted.
TC: The beginning of the year felt particularly grim, but it feels in some ways like its full speed ahead again.
CM: In January and February, we had thatpublic market hiccup, and we all said, Ooh, this is it. It feels like the start of the correction.And it didnt really happen. Interest rates are still lowand tech is still the one place where theres growth in the world and investors are still looking for growth.
I do think theres more focus on the fundamentals, and that translates from later stage growth market all the way down to the Series Amarket. I think were even starting to see it a bit inthe seed market.
TC: It seems like there arestill an awful lot of companies getting funded.
CM: The pace has slowed a bit over last year, but not a lot. Still, I know were more focused on the show me rather than the tell me. Were looking for market validation and proof points in the form of customer momentum and evidence that the business model can work.
TC: Are terms changing?
CM: No, not at the Series A stage. If you start asking for [onerous] terms, its hurts the company and it hurts us, because your next set of investors are going to say, Hey, they got those terms at the Series A; we want them, too.
TC: Are Series A valuations down at all?
CM: Interestingly, we havent seen valuations fall. Of the deals weve done this year, they are just as high as they were last year. I think the same thing is true of many growth stage companies;people are stretching to be in those special companies.
The marginal companies are going to have a tougher time. Theres a hissing, the sound of air being released, but its better than the bubble popping like it did in 2002 and 2001.
TC: What about all the money thats still out there? Venture funds are sitting on tons of capital. Money is coming in from all over the world. Where is it going to go? How is it going to be absorbed?
CM: Its a great question. Think about that LinkedIn acquisition alone. Thats billions of dollars back in investors pockets. Where is it going to go?Arguably, theres still way too much money in the system.
Were just trying to be super disciplined andwhen we see outstanding entrepreneurs and proof points that theyre disrupting large markets, we pay market rates.
TC: Are you seeing new investors bellying up to the table in these Series A deals? We talked with another VC not too long ago who said more investors from China are now in the mix.
CM: The China guys are starting to come over here. These internet platform companies Alibaba, Tencent they have global aspirations for their businesses and theyre figuring out where growth will come from next. But were still seeing it far more at the growth stage of things.
TC: Youve sold a bunch of enterprise companies and were seeing M&A in the SaaS market lately but not as much on the consumer side of things. Is that impacting how Redpoint looks at new investments?
CM: Weve historicallybeen pretty balanced between consumer and enterprise. In last year or two, weve probably made a slight shift toward enterprise.
The consumer side is a little more cyclical. Weve had these big platform shifts over the last several years the web to social to mobile. I still think were still just scratching the surface of mobile. But people are looking forwhat thenext big platform will be that enables the next flurry of consumer opportunities.Is it AR? VR? Is it next-generation interfaces, whether voice or messaging platforms?
My guess is that youll continue to see the steady growth of new, compelling, mobile-first experiences that can get [meaningful] distribution. For example, were seeing a lot of marketplace models that may not be sexy but are rethinking the way these big offline businesses work. Weve invested in Clara, which is building a mortgage origination business. We funded Flexe, which provides on-demand warehouse capacity. Were starting to see more of these models emerge. Were just picking our spots.
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