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SV Angel says it won’t be raising another fund from outside investors

Tuesday, March 26, 2019

SV Angel says it won’t be raising another fund from outside investors

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SV Angel, the seed-stage investment firm, announced today that it’s getting out of the traditional venture business. At least, said the firm, going forward, its founders, meaning famous angel investor Ron Conway and his son Topher, will be investing their own money in startups.

In a follow-up email exchange with TD, Topher Conway explained that several of the firm’s most recent checks, including to the chatbot startup Hugging Face, the hormone-testing company Modern Fertility and the electric skateboard company Boosted Boards, came from SV Angel’s existing, outside-investor-backed funds. He added that those existing funds will no longer make new investments, but that SV Angel will continue to invest in follow-on rounds in its existing portfolio companies. The outfit had closed its last fund with $53 million in late 2016.

Partners Brian Pokorny, Kevin Carter and Robert Pollak will now become advisors to SV Angel. Meanwhile, Ron and Topher Conway will be writing smaller initial checks than they have in recent years — $25,000 to $100,000, says their post — to “align” themselves better with the “thousands of firms and individuals” who are now investing in seed rounds.

As SV Angel hints at in its new post (and has come up increasingly in our discussions with seed-stage investors), it is challenging these days for any one outfit to write big checks to the most promising seed-stage companies. There’s simply too much money sloshing around.

SV and its outside investors may also have simply grown weary, with the small outfit going through several iterations over time, some of them more challenging than others.

To wit, when SV Angel was established nine years ago, Conway teamed up with former Googler David Lee, who’d helped lead certain aspects of the search giant’s business development and seemingly took over management of SV Angel with Conway’s blessing.

Soon, it was Conway; Lee; Brian Pokorny, himself a former Googler who’d also worked with Lee at Baseline Ventures for a spell; and one of Conway’s sons, Topher.

Pokorny left SV Angel in 2010 to head up a startup, returning in 2013. In the meantime, despite a growing collection of enviable stakes — including Airbnb, Snap and Pinterest — not all was well inside SV Angel. Lee and Conway were instead moving toward an acrimonious split that eventually led to a breach-of-contract lawsuit that was filed seven months ago in which Lee alleged that Conway was withholding millions of dollars from him.

Conway denied the allegations and said he would “vigorously defend” against Lee’s “meritless claims.” No court filings have appeared since, but one can imagine the whole thing leaving a bad taste with the Conways, not to mention outside investors, eager as they may be to continue funding tech startups. Lee, in fact, today runs an L.A.-based seed-stage outfit called Refactor Capital that closed its debut fund with $50 million last year.

Either way, SV Angel’s newest move is, in large part, a return to Ron Conway’s roots. Dating back to 1998, he used to write checks, largely on his own behalf, including making early investments in Google and PayPal, that established his early reputation as an investor with all the right connections.

There’s a sort of symmetry in the firm’s return to a family business now.

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