5 questions with Steve Lebow

In what will likely go down as a notoriously bad year for venture-backed exits, Steve Lebow and GRP Partners had good cause to celebrate recently when eBay agreed to acquire portfolio company Bill Me Later for $945 million.

The company, which makes real-time credit approval decisions for individual purchases, raised $202 million in total funding from GRP, Azure Capital Partners and Crosspoint Venture Partners. Los Angeles-based GRP, previously known as Global Retail Partners, first invested in 2003 at a $67 million valuation, according to Thomson Reuters (publisher of PE Week).

“It was a nice stake,” says Lebow, GRP managing partner and a Bill Me Later board member.

The eBay acquisition was the largest of three portfolio company exits Lebow has presided over during the past two years. Ulta Salon, a salon and cosmetics retail chain, went public in October 2007. Software developer Aventail sold to SonicWALL, an Internet security service provider, in June 2007 for $25 million.

PE Week Senior Editor Joanna Glasner recently chatted with Lebow about his investments.

Q: What drew you to Bill Me Later?


At GRP, our understanding of retail led into catalogue sales, then to intranets and then to the Internet and e-commerce. We started to focus on financial services and invested in EnvestNet and DealerTrack before Bill Me Later.

Having done this for 30 years, I knew Bill Me Later was an important moment company in the intersection of credit and data mining.

Q: Any concerns?


I knew it was going to be a high burn. That’s why having big reserves was so important. We knew it was going to be a good idea, but we had to fund it very cleverly.

Q: You’ve spent decades tracking the spending habits of American consumers. What does the current downturn portend?


We’re going from a consuming economy to a saving economy. I think we’re going back as a culture to the 1950s, back to good old-fashioned values. You’re going to have to save for 12 years to buy a house. Kids are going to have to pay off their student loans or move back with mom and dad.

Q: What does that mean for the venture industry?

A: This is a time for steady hands. I’m 54 years old, and I’ve never seen anything like this. And I read economic history going back 150 years.

It’s going be an exciting time to be in the venture business. But as for the quick flips, I think that’s all over. It’s going to be all about how do you solve problems and create value.

Q: Regulatory documents say your firm has raised $155 million toward fund III, which is targeted at $300 million. What’s the status of your fund-raising?


We’re fully invested from funds I and II. So, we’re looking at investments, but aren’t making any now. As for fund-raising, legally, I can’t talk about that.