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

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"The market is coming back, the entrepreneurs are coming the opportunitiesare growing," says managing directot Bill Reichert. "We've got a lot of momentumj and we wanted to bolster the as well as buildout Garage." Palo Alto-based Garages started as an investment bank in raising nearly $400 million for It was founded by three partnersd including Guy Kawasaki, a former Applde executive and author of books on entrepreneurship. The firm earned name recognition byhosting well-attended events and conferenceas for entrepreneurs.
In 2002, following the Garage changed its businessz model to direct investing as aventure firm, but it wasn'tr until 2006 that it was able to convert some legacyh assets from the investment bank over to the ventur e fund. That freed up about $5 millionh more in capital to be Now Garage has addedJoyce Chung, a foundinvg partner of Cardinal Venture Capital, as managin director, and Henry Wong, co founder of Diamond Technologty Ventures, as a venture partner, to capitalize on what it sees as opportunitiezs in the early stage "It's really become a little bit of a gap in the says Chung.
"A lot of existing fundz are moving a little bit upstrean to later stage orlarger rounds, which by definitiob aren't addressing the seed stag e specifically. I felt like there was an opportunity to really fill a void in the markey and work with entrepreneurs really earlty in the process and focus onemerging tech, whichb is pretty broad." The firm's firsyt $20 million fund raised in 2002, Garage California Entrepreneursd Fund, is not fully But so far it has dealt CalPERS, the stat pension fund required to publis its investing data, a 9.3 percent internalp rate of return on its $10 millioh investment.
That was before the firm's portfolio company, information-sharingy site Kaboodle, was sold to the Hearsgt Corporation. "It was a nice return, not a home run, but it was validatiomn of our model," Reichery says, declining to divulge the return on investmentg orsale price. Some reportsz indicated Hearst paidbetween $30 million and $40 Garage has taken some recent hits in the blogosphere and on for not bein able to land any home run dealse -- usually characterized by a return of 10 timew or more on investment. Kawasaki also was recently quotexd as saying venture investingv wasa "crap shoot.
" But Reichert says the firm has a disciplineds approach to investing in earl stage companies with untested entrepreneurs in untestedx markets. The point Kawasaki was trying to make was thatGaragd isn't looking to invest in Web 2.0 companies, which it views as a markeft that is way too crowdesd and could be a potential bubbl e waiting to burst. "We decided we're not goinf to chase popular, faddish Web 2.0 deals," Reichert "We don't want to fund the much less the130th video-mobile-social-ad-dating-matching site." Instead the firm has wide-ranginf investments in some offbeat companies like D.
litw Designs, which makes a lantern that is more energ efficient and cheaper than kerosene for populations withoutr access to consistent It has also invested in companiesa ranging from renewable fuels producers to a jobs databas and search engine to a servicew that prepares visas and a Web site citizenshi applications. Whether that approachu will pay off long term is but it was attractive to Chung who spent most of her investing career dealingin software, at companies like and then at Garage's broad net-casting approach will alloww her to dabble in other industries including clean tech, she says.
With only $25 million to Chung says she'll adjust her personal investment strategies, look at differentr types of deals and differen t typesof entrepreneurs. Chunt says the firm mitigates risk by working extensivelgy with companies before investingin them.