What I Learned In 2015: Jeb Spencer, TVC Capital

Story by Jeb Spencer


All this week, we're featuring reflections on the past year from movers and shakers in the community. Today, we have the thoughts of Jeb Spencer of TVC Capital (, a software focused growth equity fund which just raised a new fund, and has had some great success in the market. TVC Capital has also been a big supporter of socaltech over the years.

What was the biggest news for you or your firm this year?

Jeb Spencer: For TVC, closing on our new $115 million software focused growth equity fund at the end of last year made for an exciting 2015. We have added several well respected and experienced institutional investors who have helped us improve our thinking across many areas. In addition, we added some great new talent to the firm this year including Andrew Albert, Ryan Sefidfard and Zach Veenstra and this team has helped to greatly expand our deal sourcing program. Just this year alone we have studied 3,400 North American enterprise software companies including many in SoCal and dug in deep on over 200 of these companies. Our first investment in the new fund was a $12 million investment in Beverly Hills based MediaPlatform. Frost & Sullivan just named MediaPlatform the product leader in enterprise video platforms. Over the course of the year our active portfolio companies received awards or recognition on over 35 separate occasions. In summary, it really has been an amazing year and we look forward to supporting additional compelling software companies in 2016.

What was the biggest lesson you learned over the past year?

Jeb Spencer: One of the biggest challenges we face in our industry is knowing when to exit our portfolio companies. We often receive unsolicited offers for our companies and always huddle with our management teams to determine if the time is right to take the offer. Any offers that will yield our minimum threshold of 4-5x cash on cash is deemed worthy of consideration, but if a company is growing at high double digit or triple digit rates, it can be very hard to consider parting with the asset. In these situations, you are always afraid that you may be selling too soon. But things can change in technology businesses in very short order when the company is not yet at scale (sub -$50 million in revenue) and getting greedy can be very costly to the funds' returns. Earlier this year we had a healthy reminder that "bulls make money, bears make money, pigs get slaughtered." It is easy to invest capital, but very, very hard to exit, so don't be the pig and don't get greedy. You can always sell "too soon," but will struggle to sell when it's "too late."

Who or what do you think had the biggest impact on the technology industry in 2015?

Jeb Spencer: 2015 was about supersizing everything in pursuit of the next monster, billion dollar on paper valuation. It was truly the year of the Unicorn. Time will show that this was just another year when technology investors lost their minds (again) and threw the lessons of past periods of irrational exuberance out the window. More private unicorns were "created" in 2015 than at any period in history with over 60 new unicorns added to the herd this year alone. This was the year that a company with less than $1 million in revenue was valued at over $1 billion because some believed that revenue was for the naive -- it's all about eyeballs (when have I heard that one before). More than half of the dollars invested this year will have gone into $100 million plus mega rounds and these investments alone will dwarf all of the capital that was invested in all of 2013. The pursuit of getting into the next unicorn has dramatically impacted valuations with hedge funds, mutual funds and corporate investors clamoring to not miss out on the next big thing. This has all contributed to valuations increasing across all rounds by an average of 30% at one point earlier this year with some rounds up a whopping 70% year over year. So for those that say this is all warranted because everything has changed, please call me because I have some unicorn shaped tulip bulbs I'd like to sell you... they are very rare and I have a lot of bidders.

What are the technologies or things you think people out to watch in 2016?

Jeb Spencer: We are fascinated by a number of things right now so here are a few in no particular order: the continued proliferation of SaaS and cloud business models, artificial intelligence, virtual reality, millennial focused businesses, rapidly predictive analytics, technologies that support the international trend toward marijuana decriminalization, the intersection of big data and health care, the monetization of open source software, unforeseen breakthroughs in battery chemistry technology, increased dominance of OTT content distribution, new mobile/video advertising models and enriched video communication technologies. This is really just the beginning of the extraordinary things that are happening across the technology landscape.

Jeb Spencer is the Co-Founder and Managing Partner of TVC Capital, a growth equity firm focused on the investment in and acquisition of business critical software companies. TVC is currently investing their third fund and has over $235 million under management.