For New Enterprise Associates Inc., its investment return on Tableau Software Inc. was off the charts.
NEA’s $29.2 million investment in the digital-chart provider, which made its stock-market debut yesterday, was valued at more than $950 million at the close in New York, making the venture-capital firm the top winner so far this year, Bloomberg.com reported on its Tech Deals blog.
As any Silicon Valley pundit knows, the vast majority of venture-capital bets fail. What makes the business work is the very rare gain of more than 3,000 percent on an investment, like the return NEA has thus far achieved on Tableau.
NEA first backed Seattle-based Tableau in 2004, a year after the company was founded, gaining two board seats and providing $5 million to “expand sales operations and invest in product development,” according to a statement at the time. NEA, with offices in Menlo Park, California, and Chevy Chase, Maryland, put in another $10 million in 2008 and $14.2 million in 2010.
More than 10,000 companies including Apple Inc. to Bank of America Corp. have used Tableau’s software to create easy-to-use charts out of complex data.
NEA sold 2 million of its 19.6 million Tableau shares at the initial public offering price of $31. The stock closed at $50.75 yesterday.
NEA’s gains are mostly on paper for now. Insiders are beholden to a so-called lock-up period that keeps them from selling any additional shares for six months from the time of the IPO.
The venture-capital firm knows all too well what can happen in the interim. NEA was the biggest venture investor in Groupon Inc., which lost half its value in the six months after trading began on Nov. 4, 2011, as the daily deals market proved to be more hype than substance. NEA still owns all of its Groupon shares, according to Bloomberg data, and the stock is now down 65 percent since the offering.
NEA is hoping Tableau performs more like Workday Inc. than Groupon. Taking on Oracle Corp. with Web-based human resources software, Workday has more than doubled in value since first selling shares in October.
“The big parallel here is that for the first time in 20 years, there are opportunities to disrupt large segments of the software business,” said Scott Sandell, a partner at NEA who sits on the boards of Workday and Tableau. “In this case, it’s business intelligence.”