It ain’t over til it’s over…
For this week’s “Under-the-radar” feature of Utterly Biased, I reached out to Freddie Martingetti, principal at Highland Capital Partners, to see which company in Highland’s portfolio isn’t getting enough love.
Relatively quickly, I realized the irony of the “ask.” You see, in my opinion, there is no institution that is more “under-the-radar” than Highland itself.
Just take, for example, a story in the Boston Business Journal on Thursday that implies that Highland’s next fundraise is a negative signal for the firm. (More on the whole problem of doing journalism by trolling the SEC Edgar website below.)
The BBJ takes the SEC filing for the Highland Capital Partners 10 and points out that the firm has targeted $300 million for the fund, which is $100 million less than its last two funds. The story also points out how Sean Dalton and Peter Bell aren’t prominent on the filing, even though they were supposed to be taking over the reigns of Highland from Paul Maeder and Bob Higgins, according to…the BBJ, I guess???
The gist, although unstated, is that Highland Capital is in trouble.
The problem with this story is that it is hilariously late to the Highland bashing party, and, what’s more, it is wrong in its premise.
You see, Highland was actually floundering a couple of years ago, but, with the recent filing as a key indicator, it is now back from the dead.
Ask any VC or startup founder in the summer of 2015 about Highland, and they might cringe and try to avoid the topic. One person I spoke with at the time referred to the firm’s office as a “complete ghost town.” I also heard them referred to as a non-entity in terms of local investing and “sitting on their hands.” It was all bad news. By all indications, operations were shifting west just as they had for instrumental Boston-area venture firms of yesteryear like Greylock, and others like Charles River Ventures and General Catalyst, who were building larger presences in Silicon Valley.
Key members of the team had moved on, and bad luck hit the firm. Wyc Grousbeck left to buy the Celtics; eventually, Higgins joined him as part of Causeway Media Partners. Andy Miller, Quattro founder and Lexington native, left the Menlo Park office to get into the NBA as well, as a part owner of the Sacramento Kings. Miller most recently started an eSports-focused company and his own venture firm, Starting Five, with Jeff Glass. Alex Taussig bailed. Walt Doyle joined from PayPal and, in a heartbeat, left to start GasBuddy. Tragically, Staples-founder and partner Tom Stemberg passed away after a long bout with cancer.
Worse than all the team shakeups, word had hit the entrepreneur circles that things were unstable and money was tight at Highland.
By all indications, Highland was on the cusp of earning the auspicious designation of being a Zombie VC.
“Highland Capital is involved in Catalant’s $22M Series C.” Hmm.
Freddie Martignetti joins Highland. Huh.
“Highland Capital Leads $14M Series A for Rapid SOS.” Interesting.
“Highland wins VC Firm of the Year at NEVY Awards.” What?
It seems, just as quietly as it almost sputtered, Highland Capital has impressively bounced back to be a major player in the Boston investment scene.
Paul Maeder is still involved. Lycos-founder Bob Davis’s prominent role is now more public. Dan Nova is quietly playing a major role in Highland’s resurgence. Martingetti backed Drizly while at Suffolk and is a bold risk for the firm. More new talent is primed to join the firm, and it is pouring money into some noteworthy ventures including nuTonomy, Freshly, Catalant, SessionM, Rent the Runway, Amino, RapidSOS, and LevelUp. In fact, since last May, Highland has been involved in 23 deals according to my very unscientific investigative method of reading Crunchbase.
Publically, Highland has never wavered no matter what was going on inside the firm over the past five years. The firm is one of the more private of the larger VCs in Boston.
The news that it is raising another fund is a good thing, and, quite to some other suggestions, a net positive for the firm and Boston entrepreneurs.
No surprise, Freddie Martingetti shared a company in Highland’s portfolio that he thinks is not getting as much attention as they deserve.
That company is Fam, or more specifically, the maker of the Fam app Smack, Inc.
Smack first developed an app called SmackHigh which served as a group chat for high schoolers. That idea evolved into something quite different, a group video chat called Fam.
If you want to know more about the company, Bostinno’s Dylan Martin did a great write-up on the company recently that you can check out here.
At Xconomy’s event this week, The Engine‘s Katie Rae gave a great little breakdown of what the MIT-backed fund/founder community aims to accomplish in the next few years. She also talked about the mindset of students who are trying to get rich quick with Silicon Valley-type Internet companies:
“There is a brain drain towards the easier things. That’s great for an individual but for society, that’s not a good thing. That’s because you leave the next generation of great inventions on the shelf or the next innovations to be created by someone else.”
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