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Venture Capital

Kleiner Perkins Shuts Down Its Seed Venture Fund

  • Departures of young partners weaken firm’s early-stage effort
  • Kleiner to continue investing broadly in emerging startups

Kleiner Perkins Caufield & Byers shut its seed investing program, a two year-old effort to get the venture capital firm back into the potentially lucrative field of early-stage startup investing.

All three partners who ran the $4 million KPCB Edge program, Anjney Midha, Roneil Rumburg and Ruby Lee, departed in recent weeks, a spokeswoman for the firm said. There are no immediate plans to hire new early-stage experts to replace the trio. Instead, existing partners at Kleiner Perkins will evaluate and invest in seed deals as part of their daily duties, she said.

Mike Abbott, a Kleiner Perkins general partner who was a major champion of the early-stage strategy, also said Monday he’s leaving the firm. A former engineer at Twitter Inc., Abbott focused on digital investments during his six years at Kleiner Perkins. Partners Eric Feng and Muzzammil Zaveri are now in change of the firm’s plans for early-stage investing, the spokeswoman said.

The Edge program’s demise weakens the firm’s already tenuous grasp on the early-stage startup scene -- an area that occasionally offers lofty returns when VC firms back future technology giants just as they’re getting going. Kleiner Perkins owns shares in a handful of today’s hottest startups, including Airbnb Inc., Uber Technologies Inc. and Spotify AB, but in most cases the firm invested late after the valuations were already high.

Kleiner Perkins raised $1.4 billion last year for its two main funds. With the venture capital industry overflowing with cash, it can sometimes be easier to pour money into more mature startups that have begun to prove themselves and need a lot more capital. Finding, funding and then nurturing the youngest companies takes as much, if not more, work than backing later-stage businesses. Given the massive amount of capital Kleiner Perkins and other top-tier firms are tasked with deploying, some investors have simply decided to write larger checks even if it may mean lower returns.

Edge was the firm’s attempt to move quickly (it promised answers to founders within 72 hours of meeting them) and connect to more young founders with hands-on help. The website KPCBEdge.com was taken down sometime late Sunday or early Monday and the group’s mobile app -- designed to let founders easily connect with the firm’s youngest partners -- will soon be discontinued. The firm backed 13 companies through the fund, putting in an average of $125,000 for each early bet, Midha said. 

Although all Edge fund partners left within a few weeks of each other, Midha said it was not coordinated and that his plan was always to leave after a few years and do his own startup. He’s working on an augmented reality startup called Ubiquity6, but declined to provide details. Lee did not respond to a request seeking comment. Rumberg declined to comment.

Midha joined Kleiner Perkins in 2013 as its youngest partner and founded the Edge fund. The following year, while still an undergraduate at Stanford University, he helped the firm win the right to invest in the augmented-reality startup Magic Leap. The company, valued at about $2 billion when Kleiner Perkins invested in its second funding round, got a $4.5 billion valuation earlier this year, according to industry tracker CB Insights. Magic Leap has yet to release its first product and lost its top marketing executive in late 2016.

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