![]() “We spent quite a lot of time last year, and the preceding years really, saying no,” Romano says. Lightspeed took a step back from new growth deals last year-making 70% of its growth investments in companies it had already invested in previously. “It’s shocking that the number of growth deals that we saw some other firms do without talking to customers,” says Michael Romano, Lightspeed’s Chief Business Officer. The committee was an effort to guarantee that Lightspeed didn’t get ahead of its skis during the funding mayhem of the last several years. The team constructs its own forecasts, crunches its own data, and makes its own customer reference calls. While the timing of those predictions hasn’t been spot-on, firms have had quite some time to prepare.Ībout three years ago, Lightspeed formed what it calls a “re-investment team.” The committee is a group of four solely dedicated to monitoring the company’s portfolio and challenging all of the firm’s own investment assumptions. Venture capitalists have been anticipating a private market correction for years, issuing repeated warnings that things have been too good to be true for a decade. Will the magic continue without Lightspeed’s consumer hitmaker in the driver’s seat? Different times call for different measures Like many VC shops, last year was one for the books at Lightspeed: It handed out $2.6 billion in distributions to its limited partners-compared to the $1.5 billion it has given out annually over the last five.īut the market has changed, and Lightspeed’s star investor has taken a step back. Lightspeed’s early-stage funds have posted performance of 5x net or higher over a 10-year period, including during the financial crisis, according to the firm. This momentum has been driven by Lightspeed’s slew of winners across the U.S., Europe, Israel, India, China, and other countries-with 190 IPOs and acquisitions under its belt spanning names like Riverbed, GrubHub, MuleSoft, or Grab. ![]() As reported earlier by Fortune, Lightspeed recently closed four new funds, raising $7.1 billion across its early and late-stage vehicles-approximately 60% more capital since it last went to market-and it has launched a new crypto-focused joint venture with Blockchain Ventures veteran Sam Harrison. Lightspeed, too, has slowed down its pace of investing this year, according to Somaia, but he says the firm has been preparing for a downturn for years-and it clearly hasn’t slowed down its fundraising. Venture firms across the market are buckling down-upping the due diligence and slowing down from the rather chaotic pace that has been the last two years. Not to mention, it’s a very peculiar time in the private markets: Interest rates have risen, the IPO market has stalled, and the private markets have entered a new, low-valuation era. Liew “really put on the map with his foundational investments,” says Alex Taussig, a Lightspeed partner, also on the consumer team. ![]() The firm’s partners credit the Snap investment, with its “tremendous reach” as Mhatre puts it, to putting Lightspeed on many people’s radar. The consumer sector may not be Lightspeed’s largest, but it has been the loudest-in part due to the public brand recognition some of its portfolio companies have enjoyed. From Lightspeed’s thirteenth flagship fund, enterprise still made up more than 40% of the firm’s investments, while around 27% of the fund was invested in consumer startups. Since the late 90s, when Lightspeed was formed, enterprise investing has been core to the firm’s strategy-and Lightspeed didn’t start building out its consumer strategy until the 2000s, according to co-founder Ravi Mhatre, who sits at the firm’s helm with Bejul Somaia, head of Lightspeed India Partners. As Liew’s reputation evolved in Silicon Valley, so did that of his firm Lightspeed Venture Partners-a fund that had initially focused solely on the less-sexy world of enterprise investing. Liew’s consistency over 15 years in spotting winners amidst the noisy, fast-moving world of consumer investing turned him into a venture capital icon. Investments in Cheddar, Giphy, Bonobos, and Rothy’s have lined his portfolio. And it was Liew who co-led the Series A of The Honest Company, Jessica Alba’s eco-friendly consumer products company. He co-led the Series B round of buy now, pay later giant Affirm-the first funding round where venture capitalists were offered a stake in the company. His $485,000 investment in Snap-the photo-sharing social media company’s very first check-snowballed into a $8.1 million exit, awarding Lightspeed’s investors a 250x on-paper return. It is Jeremy Liew, the firm’s first consumer specialist, that catapulted the relatively little-known venture capital firm Lightspeed Venture Partners into the public eye.
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