Mohr Davidow Ventures (MDV) celebrates its 20th year anniversary this year, but it’s not planning a party. Instead, the Menlo Park, Calif.-based firm is making additional cutbacks to its seventh fund and closing its Reston, Va. and Seattle offices.
The $850 million MDV VII fund was first reduced to around $650 million last January, and has now been cut by an additional $200 million. Overall, 53% of the original capital raised in 2000 has now been given back to limited partners.
Nancy Schoendorf, co-managing partner of MDV for the past five years, is unapologetic about the reduction and says that there will be no change in strategy for the firm, long known as an early-stage investor. “In 80% of [our] investments, we are the first institutional investor,” she says. “Semiconductors, software, both enterprise and infrastructure, networks and communications have been and will continue to represent out investment footprint.
Schoendorf is understandably testy about the latest reduction; a bit fed-up with if resigned to interviews such as ours in which MDV is asked to explain the firm’s prudent moves to protect itself and its largely institutional investors from the need to invest hundreds of millions of dollars in questionable start-ups. Schoendorf points out that $450 million is closer to the “historical sweet spot for early stage investments; the $300 to $500 million range,” in which smaller amounts are allocated to promising technology companies. And with valuations for portfolio companies coming down, the actual amount of ownership by early-stage firms such as MDV will remain relatively constant.
To be certain, the past year since the announcement of the first cut in MDV VII has been one of consolidation at the firm. “Bill Ericson, our Seattle partner” for example “is moving to the Bay area, but this is due to the demands on Bill’s time and his desire to spend more time with his family, which is moving to this area.” According to Schoendorf, Ericson will continue to pursue investments for the firm in the Pacific Northwest and the firm remains interested in that region. The firm is closing the small office that it opened in Reston, Va. during the boom, however. Michael Sheridan, the firm’s East Coast partner, will stick around.
At the same time, MDV is moving from its long time headquarters at 2775 Sand Hill Road into larger offices in Building #3 at 3000 Sand Hill Road where it will be neighbors of Sequoia Capital, Sierra Ventures, CrossPoint Ventures and other investment peers in what is reported to be one most expensive office locations in the world.
MDV lost one general partner when George Zachary resigned in early 2002, but today the firm is in recruitment mode, actively seeking a new general partner to help seek out the kind of lesser known technology investments for which the firm is best known.
Contact Jerry Borrell