USA TODAY US Edition

BOOM TIMES IN SIL­I­CON VAL­LEY FOR A CHO­SEN FEW

Only ‘strong ’ firms are get­ting bought up by ven­ture cap­i­tal­ists

- Marco della Cava @mar­codel­la­cava USA TO­DAY

For tech entreprene­urs, these are both the best of times and the gnarli­est of times.

On the plus side, there’s still a lot of ven­ture cap­i­tal money chas­ing rev­o­lu­tion­ary ideas, with $15.3 bil­lion flow­ing to start-ups in the sec­ond quar­ter of this year, a 20% pop over the first quar­ter, ac­cord­ing to a MoneyTree Re­port by Price­wa­ter­house­Coop­ers and the Na­tional Ven­ture Cap­i­tal As­so­ci­a­tion.

But only stand­out ideas with ei­ther unique in­tel­lec­tual prop­erty or quan­tifi­able trac­tion are likely to ben­e­fit in the form of in­vest­ments or ac­qui­si­tions from this buoy­ant cli­mate.

“Only strong com­pa­nies are get­ting ac­quired,” Grey­lock Ven­tures’ Josh El­man told at­ten­dees at TechCrunch Dis­rupt Tues­day, cit­ing the $1 bil­lion price tags paid for self-driv­ing car start-up Cruise Au­to­ma­tion (Gen­eral Mo­tors) and Dol­lar Shave Club (Unilever).

El­man might have added an­other re­cent pur­chase to the list, Mi­crosoft’s $26 bil­lion spend for pro­fes­sional net­work­ing site LinkedIn, founded by El­man’s fel­low Grey­lock col­league and pan­elist, Reid Hoff­man.

“The pace of tech M&As (merg­ers and ac­qui­si­tions) is speed­ing up, in part be­cause (founders) look­ing to cre­ate durable long-term com­pa­nies need to join up with com­pa­nies with stronger bal­ance sheets,” El­man added.

Nowhere is that more ap­par­ent than in the boom­ing self-driv­ing car space, where the past few months have seen com­pa­nies rang­ing from Ford to Uber make large in­vest­ments in, re­spec­tively, laser radar ($75 mil­lion into Velo­dyne) and au­ton­o­mous trucks ($670 mil­lion into Otto).

“Clearly, the self-driv­ing rev­o­lu­tion is upon us,” Hoff­man said, and the win­ning com­pa­nies “will be all about the unique­ness of their tal­ent and their tech.”

Netscape founder turned investor Marc An­dreessen took the TechCrunch stage to talk about how his firm, An­dreessen Horowitz, is “all about set­ting up highly or­ga­nized speed dat­ing be­tween start-ups and big com­pa­nies, which could be Ford or even the De­part­ment of De­fense,” he said, a nod to pre­vi­ous speaker Sec­re­tary of De­fense Ash Carter.

An­dreessen said he is a big mil­i­tary his­tory buff and of­ten ad­vises lead­ers of his port­fo­lio com­pa­nies “to bor­row from the mil­i­tary when it comes to goals and tac­tics. I’ve found you have to have a very vivid idea of your goal but have to re­main flex­i­ble on the tac­tics.”

The outspoken investor has made a for­tune fund­ing com­pa­nies such as Face­book, Skype and Ocu­lus Rift. Al­though some of those bets paid off fast — Ocu­lus was bought by Face­book for $2 bil­lion just two years af­ter its 2012 Kick­starter cam­paign — An­dreessen cau­tioned en­trepre- neurs that “it still takes a decade or more to build some­thing sig­nif­i­cant.”

An­dreessen was quick to dis­miss a Sept. 1 re­port in The Wall

Street Jour­nal that sug­gested his VC firm was not yet in the elite com­pany of Se­quoia Cap­i­tal and Bench­mark, whose re­turns to in­vestors ex­ceed An­dreessen Horowitz. The re­sult of the ar­ti­cle was “my phone started to ring ” with in­vestors want­ing to get in on An­dreessen’s fund, he said.

“But it had closed,” he said, smil­ing. “My only re­quest is the next time they write an ar­ti­cle, it should be four months be­fore we close a fund.”

Other tech sec­tors get­ting at­ten­tion from VCs in­clude drones, aug­mented re­al­ity and soft­ware as a ser­vice, said Jager Mc­Connell, CEO of Crunch­base, a site that tracks tech start-up fund­ing rounds.

“The rounds are get­ting larger, but there are also fewer rounds, so you need to have met­rics and a proven path to suc­cess, and that’s why the Magic Leaps of the world are do­ing so well,” said Mc­Connell, re­fer­ring to the se­cre­tive Florida-based AR com­pany that has raised $1.4 bil­lion in three rounds thanks to siz­able in­fu­sions from Google and Alibaba.

Along TechCrunch Dis­rupt’s Startup Al­ley, entreprene­urs were hop­ing to grab even a crumb of those VC bil­lions.

“We know it’s tough out there, which is why we’re hop­ing that by get­ting users signed up maybe we can gen­er­ate some in­ter­est,” said Joshua Coyne, co-founder with his wife, Malena Martinez, of Philadel­phia-based start-up Plext, an app that al­lows users to send text mes­sages to the owner of a par­tic­u­lar li­cense plate.

Coyne said so far 10,000 peo­ple have down­loaded the app.

The as­sem­bled tech vet­er­ans did leave the en­trepreneur­ial masses with hope­ful part­ing words. El­man said that al­though Google, Ama­zon and Ap­ple may seem like mono­lithic com­pa­nies that are bound to come up with the next big in­no­va­tion, “There is still plenty of room for a good start-up to help us in­ter­act with each other.”

 ?? MARCO DELLA CAVA, USA TO­DAY ?? TechCrunch Dis­rupt’s Startup Bat­tle­field fea­tures a range of new com­pa­nies hop­ing to nab investor in­ter­est and fund­ing.
MARCO DELLA CAVA, USA TO­DAY TechCrunch Dis­rupt’s Startup Bat­tle­field fea­tures a range of new com­pa­nies hop­ing to nab investor in­ter­est and fund­ing.
 ?? MARCO DELLA CAVA, USA TO­DAY ?? Malena Martinez and Joshua Coyne of Plext, in which users text a li­cense plate num­ber.
MARCO DELLA CAVA, USA TO­DAY Malena Martinez and Joshua Coyne of Plext, in which users text a li­cense plate num­ber.

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