Greg Prow has resigned as chief operating officer and managing director of Mobius Venture Capital, following several years of downsizing at the Palo Alto, Calif.-based firm.
Prow said he felt that his job became largely irrelevant as a result of a $250 million fund cut and the loss of three partner-level professionals.
“We set up the organization to be much larger than it is, so it no longer really needed the level of service that a full-time, in-house administrative partner provides,” Prow said last week from his Los Gatos, Calif. home. “My choices either were to switch over to the deal side, or find something somewhere else that would challenge me on the administrative side.”
Prow joined Mobius in early 2000, after serving as a tax partner with PricewaterhouseCoopers. The venture firm was then known as Softbank Capital Partners, and was on a meteoric rise fueled by its focus on Internet startups.
Most notable among its achievements was the firm’s ability in 2000 to raise $1.5 billion in one month for its sixth fund, and its insistence that Nasdaq turbulence would not prevent all of the money from being committed in the proceeding 18 months.
As part of its growth, Mobius added three managing directors, in addition to Prow, and dropped the Softbank moniker, even though the firm had been operating independently – save for a limited partner relationship – of the Japanese investment giant since 1996.
Once the Internet bubble burst, however, everything changed. Not only did Mobius drop its self-identification as an “Internet venture capital” firm, it began making appeasements to limited partners. This included a reduction in the management fee on its $633.3 million fifth fund (closed in 1999) and a $250 million reduction of its sixth fund. Fund VI was 84% called down as of June 30, and had an internal rate of return of negative 21.4%, according to a June 30 investment report from the Washington State Investment Board.
As usually happens with a downsizing firm, the personnel roster also shrunk. Managing Director Carl Rosendahl left at the same time as the fund VI reduction in late 2002; Managing Director Scott Russell left in mid-2003 to join Diamondhead Ventures in Menlo Park, Calif.; and Managing Director Bill Burnham was downsized later that same year.
Prow becomes the latest to leave, although he says that he holds no grudges. The decision was finalized about a month ago, when he realized that the back-office infrastructure he had created was perfect for a $1 billion-plus fund, but not for the $300 million vehicle that Mobius is likely to begin raising from existing LPs in the second quarter of 2005. He will not be replaced at Mobius, although controller Amy Castronovo will remain on board.
Prow has not yet decided on his next step, although he already has had discussions about a handful of VC and non-VC opportunities. The most likely, and most entrepreneurial, possibility is the creation of an outsourced, back-office services provider for young private equity firms that have between $100 million and $200 million under management. “Firms of that size can’t afford to have someone in-house,” Prow explains, “but they really could use a one-stop shop for all of their administrative needs.”