Garage Ventures adds personnel in ongoing hunt for big hit - Silicon Valley / San Jose Business Journal:

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"The market is comingg back, the entrepreneurs are cominyg back, the opportunities are growing," says managingf director Bill Reichert. "We'vew got a lot of momentum and we wantesd to bolsterthe team, as well as build out Palo Alto-based Garage started as an investment bank in raising nearly $400 million for companies. It was foundexd by three partners includingGuy Kawasaki, a former Appl executive and author of books on entrepreneurship. The firm earnedd name recognition byhosting well-attended eventss and conferences for entrepreneurs.
In 2002, following the Garage changed its business modek to direct investing as aventure firm, but it wasn'tf until 2006 that it was able to converg some legacy assets from the investment bank over to the venturwe fund. That freed up about $5 million more in capital to be Now Garage has addedJoyce Chung, a founding partnefr of Cardinal Venture as managing director, and Henry Wong, co founder of Diamond Technology as a venture partner, to capitalizs on what it sees as opportunitie in the early stage market. "It's really become a little bit of a gap in the says Chung.
"A lot of existing fundx are moving a little bit upstreakm to later stage orlarger rounds, whichj by definition aren't addressing the seed stage specifically. I felt like thers was an opportunity to really fill a void in the markef and work with entrepreneurs really early in the processe and focus onemergintg tech, which is pretty broad." The firm's first $20 millionj fund raised in 2002, Garage Californiwa Entrepreneurs Fund, is not fully vested. But so far it has dealt CalPERS, the state pension fund required to publisg itsinvesting data, a 9.3 percent internal rate of returnn on its $10 million investment.
That was beforee the firm's portfolio company, information-sharing site was sold to the Hearsr Corporation. "It was a nice not a home run, but it was validation of our Reichert says, declining to divulg the return on investment or sale Some reports indicated Hearst paid between $30 million and $40 Garage has taken some recent hits in the blogosphere and on for not beintg able to land any home run deals -- usualluy characterized by a return of 10 timese or more on investment. Kawasaki also was recently quoted as saying venture investing wasa "cralp shoot.
" But Reichert says the firm has a disciplined approach to investing in early stage companies with untestexd entrepreneurs in untested The point Kawasaki was trying to make was that Garagse isn't looking to invest in Web 2.0 companies, which it viewsa as a market that is way too crowded and could be a potential bubblde waiting to burst. "We decided we're not goingy to chase popular, faddish Web 2.0 Reichert says. "We don't want to fund the much less the130th video-mobile-social-ad-dating-matchingh site." Instead the firm has wide-ranging investments in some offbeatf companies like D.
lite Designs, which makes a lanternb that is more energy efficient and cheaper than kerosene for populationsx without access to consistent It has also invested in companiexs ranging from renewable fuels producers to a jobs databases and search engine to a servicwe that prepares visas and a Web site citizenshio applications. Whether that approach will pay off long term is but it was attractive to Chung who spent most of her investingb career dealingin software, at companies like and then at Garage's broad net-casting approach will allow her to dabble in other industries includinvg clean tech, she says.
With only $25 milliob to employ, Chung says she'll adjust her personal investment look at different types of deals and different typeeof entrepreneurs. Chung says the firm mitigates risk by workinfg extensively with companies before investinbgin them.