Venture capitalists like to boast about their home runs. Now OVP Venture Partners, which manages more than $500 million, is owning up to some big whiffs. For several months, the Kirkland, Washington, firm has been airing its foibles on a “deals missed” page on its Web site, where it self-deprecatingly “limits our self-flagellation to one deal per fund.”
Gerard Langeler, a general partner, says the jokes humanize his firm to investors and entrepreneurs. “Any time you give off an air of arrogance, you’re going to turn people away.”
Langeler, 47, a 14-year veteran of OVP, surely wishes that the firm hadn’t turned away Starbucks founder Howard Schultz. As the Web site relates: “A guy walks into your office in the late 1980s and says he wants to open a chain of retail shops selling a commodity product you can get anywhere for 25 cents, but he will charge $2. Of course, you listen politely and then fall off your chair laughing when he leaves. Howard Schultz didn’t see this as humorous. And we didn’t make 500 times our money.”
When another start-up came calling, “we had a handshake on a term sheet with the CEO to put $2 million into Amazon for 20 percent of the company,” says the OVP Web page. “At the 11th hour some guy named John Doerr [of Kleiner Perkins Caufield & Byers] flew up and offered $8 million going in for 20 percent of the company. Handshake? What handshake?”
Of the 85 companies OVP has backed since 1983, half have been acquired or gone public, including digital media company Loudeye Technologies and antivirus software maker WatchGuard Technologies. OVP’s portfolios have posted decent returns: The $40 million fund that missed out on Amazon, for instance, performed in the second quartile among its peers. But the might-have-beens are provoking what Langeler calls “outstanding reactions. Entrepreneurs in particular have written unsolicited e-mails saying this is terrific, and I know a couple of our limited partners have gotten a chuckle out of it, too.”
