Silicon Valley Banker Plies Startups With Wine And A Tudor Mansion
By Ryan Flinn
June 27 (Bloomberg) -- Investment banker Kelly Porter, who has bought, sold and grown dozens of technology companies in Silicon Valley, has an unusual way of finding his next deal: He invites CEOs of startups to his $28 million mansion for dinner.
Porter, a managing director of Woodside Capital Partners, plies executives with Grand Cru Bordeaux and invites them to a pre-dinner chat in what he calls a sultan’s tent, next to a swimming pool and antique bronze statue of Neptune.
His goal is to get ahead of the competition by networking with young entrepreneurs before they’re scooped up by the big bankers and venture capitalists on Sand Hill Road. At a time when startups like Zynga Game Network Inc. can go from obscurity to amassing billion-dollar valuations in months, Silicon Valley deal makers are striving to find potential targets earlier.
“I want to know what’s happening in the market, what people are interested in, what companies are doing,” said Porter, 47. “There’s a unique opportunity to bring people together in this setting that I don’t think you can do really anywhere else. They’re not at a trade show, which is a big massive thing, and you’re not at an office, which tends to be a little more transactional.”
Porter, the son of E*Trade Financial Corp. founder Bill Porter, specializes in advising digital media and entertainment companies. He typically holds these dinners once or twice a month, using his Los Altos Hills home as an attraction. Porter has spent tens of millions restoring the house, a 1916 near- replica of the Tudor-style Speke Hall in Liverpool, England.
Location Services
For an event on June 17, he invited entrepreneurs who run location-based services for devices. The guests got a tour of the mansion, including the wine cellar, a ceiling covered in 16th century Venetian paintings and a library filled completely with Swedish leather-bound books.
Silicon Valley has moved beyond the old model of just using the big venture capitalists to broker deals, said Aaron Barnes, who attended the event.
“That dinner was a good example of what people need to do today to stay relevant to the entrepreneurial pool,” said Barnes, a senior vice president at PlacePop Inc. His company runs an iPhone app that acts as a digital loyalty card. “People have a lot of options now beyond Sand Hill Road.”
Porter isn’t alone in wooing startups outside of business hours. Gamiel Gran, a partner at Menlo Park-based firm Sierra Ventures, says networking comprises about 85 percent of his job.
‘It’s Huge’
“It’s absolutely helps the deal flow -- it’s huge,” he said.
Startups are getting by with less funding and relying more on individuals to provide seed money. That means they stay out of the spotlight longer. The size of the average venture round has shrunk by half to $6.3 million since the dot-com bubble in 2000, according to the National Venture Capital Association in Arlington, Virginia.
The attendees at Porter’s dinner included executives from Brightkite, a site that allows group texting; Quova Inc., which locates website visitors geographically; and Skout, a dating service.
“Kelly’s interested in meeting the movers and shakers in technology he might not meet in the Valley,” said Myles Weissleder, founder of SF New Tech, who organizes monthly technology events in San Francisco. He picked the dinner’s attendees.
Wine and Cheese
Guests arrive at the cobblestone driveway and are directed through an arch separating the grand ballroom from the house to the tent on the back lawn, where Porter greets them with wine and cheese.
Woodside Capital, based in Palo Alto, helps oversee transactions between companies. The firm advised ARC International Plc on its $41 million sale to Virage Logic Corp. in 2009, and Silicon Clocks on its buyout by Silicon Laboratories Inc. in May of this year.
The guests at Porter’s dinners may need that same kind of help in the future, he said. “Most of them are probably looking to be acquired at some point.”
Porter was chairman and CEO of CatchTV Inc., an interactive TV software company that was acquired by ACTV Inc. in 1999. He’s worked with the boards of 17 companies, as either a director or adviser. He’s also invested in 22 businesses as both a venture capitalist and investment banker.
Porter makes his own predictions about the next big technology deals. He has forecast that Cisco Systems Inc. could acquire LinkedIn Corp., the professional-networking site, and that Google Inc. might buy Roku Inc., a maker of audio and video equipment.
Side Deals
The dinner also lets startups network with one another, said Kent Lindstrom, the founder of PlacePop and former CEO of Friendster Inc. His company is now in discussions with Brightkite and Skout about working together.
“We’re all just kind of sitting there doing deals,” he said. “That concept, which would be called collusion in any other industry, and yet here you all get together and share ideas.”
Porter spent seven years restoring his estate to its original glory. He wanted to make it a gathering place for intelligent and well-connected people.
“I always wanted a place where I could bring people together,” he said.
To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net
Last Updated: June 27, 2010 00:01 EDT |
