Institutional Venture Partners Ranks #1: The Inner Workings of a Top-Ranked Investment Firm

Jules Maltz of Institutional Venture Partners speaks with GrowthCap on topping GrowthCap’s Top 25 Growth Equity Firms ranking and how IVP has ensured consistent success.

RJ: Jules, good to connect. First off, congratulations on ranking #1 on GrowthCap’s Top 25 Growth Equity Firms. The list involved detailed analysis around a variety of criteria including returns data as well as your track record over a series of years.  IVP was a very consistent performer in the top tier and you personally have great experience at IVP so we very much appreciate you taking the time.  Maybe we can kick off with a key question that we’re always curious about, and that is how is your firm able to consistently perform year after year, and in tandem to that what do you think are the key aspects regarding how IVP operates that help you achieve strong outcomes on a consistent basis?

Jules: Our biggest asset is our focus.  We wake up in the morning every day looking for the fastest growing technology companies that are market leaders with great management teams, and we’re willing to cross the country, and in some cases, the world to find them.  We don’t have a healthcare fund, a clean tech fund, a China fund, an India fund or a Brazil fund.  We’re a team that meets together face-to-face on a daily basis that looks for the best companies in our specific focus area, and I think having that mindset allows you to be really successful in identifying those companies, helping them once you’ve invested and ultimately generating strong returns.

RJ: And can you share a little bit on the sectors you focus on for those family offices and ultra high net worth individuals in our readership that aren’t as familiar with the fund?

Jules: Absolutely. We’ve got a strong portfolio of both enterprise and consumer technology companies. Within the consumer space some of the most notable companies that we’ve historically backed include Twitter, Snapchat, Zynga, HomeAway, and SuperCell. Within the enterprise space we’re investors in companies such as Dropbox, Pure Storage, AppDynamics, Slack and Zenefits.  So having a very balanced portfolio of both consumer and enterprise benefits us quite a bit, and then within those areas we do a lot of investing within new trends in technology.  For example, we identified mobile as a large trend five years ago which led us to get excited about Twitter and about the mobile gaming space.  Other top mobile apps that we’ve invested in include SoundCloud and Shazam; I think we have more top 100 iOS apps in our portfolio than most any other investment firm.  We’ve also done over 20 SaaS investments and are very strong on the enterprise side.  More recently, we’ve started to move into more storage and security investments as we believe the datacenter is being transformed so we are identifying the companies we think are leaders in disrupting that space.

RJ: Are there additional trends that you find particularly compelling, or anything innovative that you are paying attention to that you think may have a big future but haven’t necessarily acted on yet?

Jules: I believe that software in the future is going to be bought not sold.  There will be classic companies that are product-focused companies with product-focused CEOs who build great software that spreads almost virally throughout an organization without the need for much active selling.  I think Slack is an example of a company that we recently invested in that plays on that trend.  It has the metrics of a consumer company in terms of how fast and viral it’s growing, but the monetization model of an enterprise business.  It’s incredibly exciting to have the capacity and the ability for an enterprise company to scale just like Twitter or Facebook scaled.  We’re looking for more of those.

RJ: We’re always very curious to hear about the backgrounds of the folks we meet.  Could you share your background leading up to IVP and with IVP?

Jules: I’ve been investing since 2004 and worked in investment banking for three years before that.  I was really lucky because in 2004 I joined a firm called 3i that was an international private equity and venture capital firm out of Menlo Park. In 2004, nobody at the firm focused on the internet space, and everyone thought that internet was dead because of the bubble; no one wanted to touch it.  And I was a 24-year-old associate, new to the investing side of the industry and thought the internet was a pretty big opportunity so I wanted to dig into it.  As a result, I got to back some incredible companies while I was at 3i.

Then I went off to business school and worked my summer at AdMob as an intern and loved that business.  Ultimately, I thought I was going to become an operator, but before I did that I thought I’d see if I could find an investment firm that had the perfect role, opportunity and culture.  So I reconnected with Sandy Miller who was one of the partners at 3i when I was there and had joined IVP.  As I got to know Sandy and the team I was incredibly impressed with IVP, the strategy, culture and camaraderie.  It was really the perfect job and I was lucky enough to join in 2008 and have been here for seven years.  My first investment that I worked on was Twitter which is probably the biggest stroke of luck. Since then I’ve gotten to work with some great companies like Dropbox, Buddy Media, Yext, RetailMeNot and, more recently, Zenefits and Slack.

RJ: Fantastic.  That’s a great track record with some great wins along the way. And what are some of the characteristics that you look for when you’re evaluating companies?  Are there some themes that you find are key to great companies?

Jules: We believe that each year there’s going to be 10-15 companies that are created that will generate the vast majority of returns for our space.  It’s our job to invest in as many of them as possible so we really look for companies that are going through what we call ‘hyper growth’.  This means that they’re not just growing 100% or 150% year-over-year, but that they’re growing 500% or 1,000% year-over-year.  It means there’s something working in their business on an unprecedented level and we look for market leaders in big markets that have that type of growth rate.  We also look for management teams that know how to operate these types of businesses at scale.  When all those factors come together we get really excited, we mobilize as a team to do whatever we can to find a way to invest in those companies, even if that means all flying to their offices or driving up to San Francisco.  We’ve got a very team-oriented culture, and as soon as we identify a company that fits what we look for we all work together to find a way to invest in the business.

And then once we’ve invested we’re really working hard to help the company grow and we’ve got a track record of doing that. 100% of our portfolio is late-stage, fast growing companies so we feel we’re positioned the best to help those companies given our prior experience.  We’ve had over 101 IPOs and we had five IPOs last year so we’ve got significant experience in helping companies go public and helping them go through M&A processes, and hiring senior executives and board members.  It’s a key component of how we help our companies grow.

RJ: That’s excellent.  Well, this has been extremely informative, and congrats again on all of the success to date.  IVP is a firm that continually comes up as one of the top players in growth and venture funding so I appreciate it and thanks for taking the time.

Jules: More than happy to, RJ. Take care.

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