Learning From Emergence Capital’s Veeva Investment

One of the recent trends in the venture capital industry is that firms are building platforms. In the pursuit of a platform, many firms are staffing up in multiple functional areas, raising larger funds, investing across stage (all the way from seed to pre-IPO), growing both consumer and enterprise practices, and dabbling in geographies in which they haven’t had a long term presence. VCs routinely encourage their portfolio companies to focus, but, by trying to do everything, these firms are risking losing focus themselves. While there are elements of a platform approach that are appealing, with so many firms in the market, I believe it is important for partnerships to maintain focus to achieve success.

Emergence Capital stands apart from the noise in today’s market. For those who know, Emergence is a relatively small fund, consistently focused on early-stage software and cloud businesses. Over the course of various vintages, Emergence has stuck to its knitting, kept its fund size consistent, and quietly built up demonstrable competence and a deep network around the areas it cares most about. As a result, people know when to go to Emergence. Their signal is clear. While they don’t make the most noise, they’ve built a reputation as a highly-respected partner in any deal in which they participate.

Emergence was recently in the news, which prompted me to share my thoughts. A month ago Veeva Systems had its IPO and was very warmly received by the public market. Emergence led the one and only venture round in Veeva back in 2008. Earlier in his career, Emergence partner Gordon Ritter worked closely with Salesforce.com founder and CEO Marc Benioff, helping Benioff get Salesforce off the ground initially. Ritter then co-founded a cloud platform company with Benioff that ultimately was rolled back in to Salesforce to help form the force.com business. Veeva’s founder, Peter Gassner, took over as GM of force.com and got to know Ritter as a result. When he decided to start Veeva, Ritter and Emergence were the obvious choice venture capital partner – Ritter had already proven himself a capable and knowledgeable cloud executive. As a result, Emergence won the competitive deal and became the largest external shareholder in Veeva.

Today, after years of hard work by the folks at Veeva, Emergence’s stake in the company is worth well north of $1Bn, making this deal among the best ever done by a VC. I’m writing this because, as a VC myself, I have great admiration for the focus, steadiness, and precision of Emergence. Focus isn’t always easy because it means saying no to lots of “hot” trends that will fall in and out of favor, but as Emergence has shown with Veeva, focus can really pay off.  At GGV Capital, where I work, we aim to do the same — to make China an integral part of our investment strategy, and to identify people and businesses that are “Going Long.” It is a competitive world out there, so at GGV, we need to be as focused on long-term independent businesses and China as Emergence is focused on SaaS and cloud.

On a personal level, I deeply respect the quiet resolve of the Emergence team. Simply put, it is the type of work we try to build into our culture at GGV. While we are a different firm on many dimensions — stage, focus, history — we value this approach to venture capital and bestow upon it a great deal of respect.
The post Learning From Emergence Capital’s Veeva Investment appeared first on Going Long.