About Steve Anderson
Steve Anderson, founder of Baseline Ventures, has been active as a seed-stage investor and commentator on startup financing. In a series of interviews from 2011 to 2012, Anderson discussed his investment philosophy, which he described as focusing on companies that could achieve exits around $100 million, a size he argued was often overlooked by traditional venture capital firms. He stated that he started Baseline Ventures after struggling to raise seed funding for his own company, and that his model aimed to allow entrepreneurs to sell smaller stakes in their companies. Anderson noted that he had invested in over 70 companies, with 18 having exited and only three having closed down, and that he had raised a $100 million fund, which he said took four weeks to raise compared to nine months for his initial $10 million fund.
Anderson discussed several of his notable investments, including Instagram, Weebly, and Heroku. Regarding Instagram, he said he invested in Kevin Systrom when the product was a location-based blogging platform called Bourbon, and that he helped recruit co-founder Mike Krieger. He described the eventual Instagram product as a "pruning" of features rather than a pivot)Skip. Anderson also discussed the concept of "signaling risk," where large venture capital firms write small seed checks and then decline to follow on, which he said can make it harder for entrepreneurs to raise subsequent funding. He expressed confidence in Twitter's ability to monetize, stating he had not sold any shares since investing in 2007, and said he was looking at both consumer and enterprise technology opportunities.
Source: AI-verified profile updated from Steve Anderson's recent appearances.
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Transcript (19 segments)
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Narrator0:00
Not long ago, startups in need of cash found themselves with an impossible choice: sell half their company to a big VC firm or cobble together a string of private angel investors. Since then, a third option has emerged: super angel funds. Here to help clarify what they do differently from traditional VCs is Steve Anderson, founder of seed stage investment firm Baseline Ventures. Welcome to Bloomberg West. Happy Halloween.
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Steve Anderson0:23
Thank you.
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Interviewer0:25
Where's your costume?
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Steve Anderson0:27
Well, I'll put it on later tonight.
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Interviewer0:30
Okay. So first of all, what exactly do you call yourself? A super angel? Is that what you go by?
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Steve Anderson0:33
Well, some people do. I prefer seed investor, but there's lots of different names: micro VC.
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Interviewer0:39
So what exactly does that mean?
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Steve Anderson0:41
Well, I think what it truly means is a lot of us got started five, six, seven years ago with the whole idea that it costs far less to start a company now. And while entrepreneurs still need help, what that really means is smaller dollars going in, the same amount of help as entrepreneurs have wanted and expected, but not the big dollars that large VCs want to put into companies.
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Interviewer1:04
Now you say you're looking for $100 million exits rather than billion dollar exits, right? How does that make finding deals different?
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Steve Anderson1:14
That's a great question. Actually, finding deals is exactly the same. I've been on record saying that if you look at all the exits, most of Sand Hill Road is geared towards the five or ten big companies, and that's a great ecosystem for that. But it turns out there are far more companies that exited around $100 million, and that is something I thought was a fantastic thing to go after. Why not build a business that is successful on those types of exits, when those entrepreneurs are also successful in those types of exits?
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Interviewer1:43
Now you are in a lot of hot consumer-facing internet companies: Twitter, Instagram, StumbleUpon. These are the kinds of companies that have a lot of users, but there are still questions about how they're going to make money. How confident are you that these companies can turn their users into dollars?
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Steve Anderson1:57
I'm quite confident. In Silicon Valley, we're always looking at users first and revenue second. Facebook was a great example of that. Twitter is moving along quite nicely.
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Interviewer2:08
What are Twitter's monetization plans? As you see it, what should their path to monetization be?
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Steve Anderson2:12
Well, I think they're experimenting with some pretty awesome things right now. Adam Bain, who came over from Fox, has been doing a lot of that testing: in-stream ads and sponsored links. So they're probably better to talk about than I am. But I haven't sold a single share of Twitter since I invested back in 2007, so I'm quite bullish on Adam and Dick's and the team's ability to monetize. Pretty confident they're going to make it happen.
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Interviewer2:41
All right. How about the proliferation or even explosion of angel investing out there? It seems like everybody these days dabbles in angel investing. I'm sure that increases competition for you in some way. How do you stay ahead of the deal flow?
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Steve Anderson2:56
Well, I think you're right. There are so many more options for entrepreneurs, and I think that's actually a good thing because to have more options means more things get funded, more people are trying things. The whole ethos of Silicon Valley is try, try, try and see what actually sticks. For me personally, I've invested in over 60 companies since I got started, and those entrepreneurs, founders, and co-founders basically build my network of hundreds of people that I rely on to help with my deal flow, as well as other seed investors. The other ethos we have in this market, as opposed to the venture capital market, is that we tend to syndicate more, we tend to share deals, we tend to work together to help entrepreneurs build companies.
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Interviewer3:36
Are you looking beyond consumer internet companies at this point to enterprise companies?
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Steve Anderson3:40
Absolutely. I've had more than 15 exits since I started, and a lot of those exits have been on the cloud and infrastructure side, mostly because that is as important as the consumer things that are changing right now. Heroku being one of the most prominent ones that Salesforce bought last year, and Index was just bought by LinkedIn. So those are core enterprise technologies. I tend to span the breadth of many different types of opportunities.
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Interviewer4:08
All right. Steve Anderson of Baseline Ventures, thanks for your insights here on Bloomberg West.
