Fred Wilson, the venture capitalist who has invested in Twitter and Zynga, apologized for critical remarks about corporate VC firms, saying “well established investment groups” can be good for entrepreneurs.
Wilson, a managing partner at Union Square Ventures, said he was “sorry” on his blog for comments about corporate venture funds he made last week at a PandoMonthly New York event. Larger VC funds run in-house by companies, such as Comcast Ventures and Google Ventures, can be “supportive investors” with “good reputations, including with me,” Wilson said today.
Wilson said June 13 that he would “never ever ever ever” do business with corporate VCs because they can’t effectively invest and nurture startups since their motives often aren’t aligned with the goals of entrepreneurs. Heidi Mason, co-founder and managing partner at Bell Mason Group, speaking at the Bloomberg Next Big Thing Summit in Half Moon Bay, California this week, said the comments were a “patronizing, historical view.”
“They are good co-investors and can make very effective introductions with the companies they are affiliated with,” Josh Elman, principal at venture capitalist firm Greylock Partners, said about corporate VCs in an e-mail today. “The best ones feel like they are supporting their investments more than their own companies, with hopes of long-term benefits to both.”
Company venture funds put money in 17 percent of deals in the U.S. in the first quarter of this year, up from 13 percent in 2009, according to the National Venture Capital Association. Corporate VCs were most active in 2000, when they participated in 24 percent of investments, according to NVCA, which tracked the market back to 1995.
Wilson, whose firm is based in New York, wrote on his blog today that he still strongly advises against entering into relationships with corporate venture firms that are looking for “active strategic investments” instead of passive support. “These type of investments and relationships have almost universally ‘sucked’ for our portfolio companies,” he wrote.
Comcast Ventures has invested millions in more than 100 startups including Flipboard and Fullscreen. Media companies “don’t get too far” without a corporate partner because of difficulties scaling their businesses, Michael Yang, managing director of Comcast Ventures, said at the Bloomberg Next Big Thing Summit.
–By Alex Sherman and Douglas MacMillan