This was a milestone year for Cervin Ventures, with 18 active companies across our portfolio. We want to take this opportunity to thank our entrepreneurs and partners for a great year.
As we embark on a new year, we have spent the first few days reviewing our strategy, portfolio, operations and plan for 2016. We are convinced that our strategy and discipline will hold us in good stead through good times and bad. When we started out in the world of venture capital, we had just come out of one of the worst recessions in recent memory. We had promised our LPs who bet on us as first-time VCs, that we would be disciplined in our strategy around how much we invest per company ($1-2m), valuations and stage at which we invest (single digit millions at seed stage), number of companies we would invest in annually (4-5) and time-frame around which the fund is deployed (3-4 years). We stuck with our plan even as we saw the exuberance around us leading other funds to invest faster and go back to the well for additional capital sooner than needed. We also ensured that all of our portfolio companies stuck to their burn rate plans in alignment with their growth.
As the macro environment changes, we are prepared to tackle a downturn. Venture capital investing has peaked in 2015 at $128B; this is likely to come down. The $128B that went into VC is going to fall to more normalized levels, likely levels of 2011-13 ($50b) era. LPs are likely to rationalize their VC asset allocations amidst volatility in the macro environment.
For the early stage ecosystem, the “froth” is likely to come off. We find ourselves playing in the “micro-fund” universe that has over 250 early stage funds. Many of these funds (including ours) were formed in the last few years – and a significant number of these will not survive. Angel investors are likely to pull back significantly. And seed funds are likely to see only the best companies get funded through follow-on rounds.
We believe that our discipline through the go-go years of early stage investing, and our core strategy will stand the test of time. Our portfolio grew to 18 active companies and significant new investments happened across our portfolio in SnapLogic, EdCast, Tynker, QuanticMind and Replay Technologies.
We also exited our under-performing companies and returned more than the invested capital. Our ability to exit non-performing private software assets is an important part of our job. Maintaining good relationships with founders through thick and especially thin is important. It is a vital part of our “contract” with the entrepreneurs we work with.
We find ourselves in a good position with most of our portfolio companies well capitalized through 2016 and into 2017. Our mantra over the last few quarters has been to ensure that our portfolio companies could handle a potential “nuclear winter.”
We are guiding our founding teams and operating managers to manage burn rates and have realistic operating plans. Hope is not a strategy. Our portfolio companies are ensuring that they have a plan for an immediate future where the external financing environment is irrelevant.
We look forward to partnering with you for a successful 2016.
Replay Technologies Shoots and Scores at CES!
Intel CEO Brian Krzanich used part of his keynote address at CES 2016 last week to highlight Replay Technologies’ “mind-boggling” freeD video technology. On CES’s main stage, Krzanich showed attendees exactly how this incredible innovation in instant replay technology is changing the game for all kinds of sports fans.
“It captures the sports action you love and turns it into a true 3D experience that you can re-watch as if you are right in the game,” said Krzanich. “With this technology, you can control and change the view to any perspective you want. You become the director.”
Backed by Cervin Ventures, Replay Technologies has been named one of the world’s top 10 most innovative companies in sports. Their technology is used by Major League Baseball, the National Football League, pro and college hoops, the U.S. Open Tennis Finals and the 2012 London Olympics.
And according to Replay Technologies’ Preston Phillips, “We believe that in a not-so-far point in the future, people would be able to turn on their viewing devices, be it a 2D tablet or a 3D VR/AR device, and leap right inside the game. “They could run beside their favorite players, watch several feet away from the ball or simply hang around the sidelines.”
Punchh ranks #1 in Best Small Business CRM Software!
Congratulations to our portfolio company Punchh on being ranked number one in best small business CRM Software by the 10 Best Network! Made up of individuals who have worked in online branding & CRM for years, 10 best creates an algorithmic application which rates and reviews the best CRM software based on a number of qualitative and quantitative ranking points.
“Punchh is a CRM platform that allows merchants and retailers to fully engage their customers all over the world. This particular technology provides analytical tools that can be used to study sales, losses and other metrics associated with the retail world. Punchh can be used with any point of sale system in a physical store or e-commerce website. This CRM software is engineered to provide helpful insight with visual presentations such as graphs and charts that are generated in real time. Customer engagement is improved significantly thanks to personalized emails that can be quickly written via attractive templates and other modules.”
Company Spotlight: Bedrock Analytics
Bedrock makes discovering insights from retail data accessible for sales teams within consumer packaged goods (CPG) companies. SaaS platform enables the $2.1T CPG industry to better understand, predict and optimize the performance of their products in retail. Their customers use the software to confidently convince retailers to sell and expand their products by leveraging their insights and data-based recommendations. They have developed software that is a game changer for an archaic industry where CPG sales managers still have physical meetings with retail buyers to negotiate the distribution of their products.
Bedrock’s major point of differentiation is the successful combination of modern data visualization technology with data-based narratives that are designed for a particular industry and fine-tuned for a specific dialogue between sales manager and buyer. Their unique user experience is centered on simplicity, intuitiveness & transparency.