Chris Moore is an increasingly rare breed. At the founding of Redpoint Ventures 17 years ago, Moore joined as an associate and — unlike today’s associates who often are cycled in and out of venture firms — he was made a partner. Since then, Moore has led deals in numerous companies that have gone on to sell for sizable amounts, including Auditude, acquired by Adobe; Right Media, acquired (and later shut down) by Yahoo; Efficient Frontier, acquired by Adobe; and Blue Kai, acquired by Oracle.
He also led Redpoint into Refresh, acquired earlier this year by LinkedIn for undisclosed terms.
Earlier today, before leaving Redpoint’s Sand Hill Road office for the long weekend, Moore talked with us about what he’s seeing in the market right now and why it “feels like it’s in flux.” More from that chat, edited for length:
TC: We’re sort of confused about what’s happening out there these days.
CM: I know, it isn’t really clear right now which way the market will go. We had a real run-up last year and the year before, with lots of money coming into the system and momentum investing and all the unicorn hoopla. Then, late last year, it started to feel a little more discriminate, I think in part because the funding ecosystem was just getting exhausted.
TC: The beginning of the year felt particularly grim, but it feels in some ways like it’s full speed ahead again.
CM: In January and February, we had that public market hiccup, and we all said, “Ooh, this is it. It feels like the start of the correction.” And it didn’t really happen. Interest rates are still low and tech is still the one place where there’s growth in the world and investors are still looking for growth.
I do think there’s more focus on the fundamentals, and that translates from the later stage growth market all the way down to the Series A market. I think we’re even starting to see it a bit in the seed market.
TC: It seems like there are still an awful lot of companies getting funded.
CM: The pace has slowed a bit over last year, but not a lot. Still, I know we’re more focused on the “show me” rather than the “tell me.” We’re looking for market validation and proof points in the form of customer momentum and evidence that the business model can work.
TC: Are terms changing?
CM: No, not at the Series A stage. If you start asking for [onerous] terms, it’s hurts the company and it hurts us, because your next set of investors are going to say, “Hey, they got those terms at the Series A; we want them, too.”
TC: Are Series A valuations down at all?
CM: Interestingly, we haven’t seen valuations fall. Of the deals we’ve done this year, they are just as high as they were last year. I think the same thing is true of many growth stage companies; people are stretching to be in those special companies.
The marginal companies are going to have a tougher time. There’s a hissing, the sound of air being released, but it’s better than the bubble popping like it did in 2000 and 2001.
TC: What about all the money that’s still out there? Venture funds are sitting on tons of capital. Money is coming in from all over the world. Where is it going to go? How is it going to be absorbed?
CM: It’s a great question. Think about that LinkedIn acquisition alone. That’s billions of dollars back in investors’ pockets. Where is it going to go? Arguably, there’s still way too much money in the system.
We’re just trying to be super disciplined and when we see outstanding entrepreneurs and proof points that they’re disrupting large markets, we pay market rates.
TC: Are you seeing new investors bellying up to the table in these Series A deals? We talked with another VC not too long ago who said more investors from China are now in the mix.
CM: The China guys are starting to come over here. These internet platform companies — Alibaba, Tencent — they have global aspirations for their businesses and they’re figuring out where growth will come from next. But we’re still seeing it far more at the growth stage of things.
TC: You’ve sold a bunch of enterprise companies and we’re seeing M&A in the SaaS market lately but not as much on the consumer side of things. Is that impacting how Redpoint looks at new investments?
CM: We’ve historically been pretty balanced between consumer and enterprise. In last year or two, we’ve probably made a slight shift toward enterprise.
The consumer side is a little more cyclical. We’ve had these big platform shifts over the last several years – the web to social to mobile. I still think we’re still just scratching the surface of mobile. But people are looking for what the next big platform will be that enables the next flurry of consumer opportunities. Is it AR? VR? Is it next-generation interfaces, whether voice or messaging platforms?
My guess is that you’ll continue to see the steady growth of new, compelling, mobile-first experiences that can get [meaningful] distribution. For example, we’re seeing a lot of marketplace models that may not be sexy but are rethinking the way these big offline businesses work. We’ve invested in Clara, which is building a mortgage origination business. We funded Flexe, which provides on-demand warehouse capacity. We’re starting to see more of these models emerge. We’re just picking our spots.