In the 10 years since Foundation Capital firm was formed, its partnership has remained virtually unchanged.
That all changed last week when the Menlo Park, Calif.-based firm announced that Rich Redelfs, the longtime CEO of Wi-Fi semiconductor company Atheros Communications, had been promoted from executive in residence, a full-time salaried position, to venture partner, a full-time position that comes with a salary and, he says, some carry.
The firm has six general partners: Bill Elmore, Kathryn Gould, Adam Grosser, Paul Holland, Paul Koontz, Mike Schuh and Warren Weiss. In 2003, the firm lost General Partner Mark Saul, who died.
Redelfs is the third venture partner that Foundation has added in the last five months. In February, it similarly promoted EIRs Ashmeet Sindana and Dave Stevens to the position.
Venture partners have nowhere near the influence or power of general partners. Nevertheless, Foundation is likely looking for some fresh perspectives and broader deal flow.
Already, the firm is crediting Redelfs for helping to invest in SiBeam, a Fremont-based wireless startup that last week assembled its first round of $15 million from Foundation, New Enterprise Associates and U.S. Venture Partners.
Redelfs also gets credit from Foundation for helping Solarflare Communications, whose 2001 Series A was led by the firm, to raise a $40 million recapitalization round that included Oak Investment Partners and Intel Capital earlier this year.
It looks as though Foundation, despite some success, could benefit from new blood. Its first two funds, of $75 million and $98 million, saw a string of winners, including DVD rental giant NetFlix Inc. (Nasdaq: NFLX); content management software company Interwoven Inc. (Nasdaq: IWOV); and Atheros (Nasdaq: ATHR), which was one of last year’s largest tech IPOs when it raised $126 million in its debut in February 2004.
Foundation’s third fund, Foundation Capital III, closed in 2000 with $275 million and has seen three of its 23 companies go out of business and another four acquired.
One startup raised $16.5 million and sold for $4 million; two sold for undisclosed amounts after raising $63 million and $10.7 million; but a fourth, Peribit Networks, proved a big hit, raising $42.3 million from five firms including Foundation, Accel Partners and Mayfield before Juniper Networks bought the company in April for $337 million in cash and stock.
Naturally, the full potential of its fourth and current fund remains to be seen. That fund, the firm’s biggest by far at $595 million, closed in 2002
As Elmore puts it, “You can’t expect that there will be exits in a 3-year-old fund.”
At the moment, fund IV is looking lackluster. None of the 25 companies in which it has invested has exited, and many of them are in enterprise software, about which Elmore himself concedes is a very tough space right now.
“There’s room in the market for 10 companies; not 1,000,” Elmore.
Still, Elmore says that the firm has roughly 18 months to show its long list of LPs (including Harvard University, Yale University and the University of Texas) that it has the goods. That’s when the firm expects to be out in the market again. And in the venture community, 18 months is an eternity.