BK: For those who aren't familiar with Redpoint, what kinds of investments do you focus on, and what's your current fund?
BJ: Redpoint invests in a broad range of technology companies, including software, data center infrastructure, semiconductors, and wireless technology companies. Our current fund, Redpoint Ventures II, is $750 million in size and was started in 2000. It has plenty of uninvested cash waiting to be invested.
BK: Where are your current investments, and who have you invested in most recently?
BJ: Our investments are concentrated in southern and northern California, with an occasional investment elsewhere in the United States. Most recently, we have invested in Digital Evolution in Santa Monica (web services software), and in Northern California we have invested in: Fortinet Inc. (network security), Mobilygen Corp. (imaging chips), and Kodiak Networks (technology for wireless communication).
BK: It seems like there's been a bit of an increase in venture activity in the past month or so--do you think things are starting back up?
BJ: Yes, I think there is improved deal flow, due to more entrepreneurs deciding to start companies, and the venture community is moving back to the middle of the risk spectrum after first being too risk tolerant, then too risk averse. The result is an increase in investment activity that I expect to continue.
BK: Do you think entrepreneurs and investors have learned their lessons from the excesses of the Internet bubble?
BJ: Absolutely yes. Entrepreneurs today realize that ideas must be unique and important in order to attract funding, not just another e-commerce business. And their price expectations are now realistic, unlike a couple years ago. Investors, after seeing negative double digit returns for 2001-2002, are again applying traditional criteria to decide what to invest in, and insisting that companies have a well thought out plan to get to profitability.
BK: What's the top criteria for your fund to invest in a deal?
BJ: Our criteria include (1) good technology, meaning that it is protectable and important in its market, (2) a large market, or one that is growing rapidly and will be large, (3) a good management team (or a willingness to hire the right people), and (4) a reasonable relationshio between the cash required to build the company and the potential value of the company if it is successful.