by Ken Loveless
I’ve known Mike since 2006 when he was a partner at Panorama Capital. I was at SVB and responsible for the relationship with Mike’s firm. He and I often spoke about how the startup landscape was changing and by definition, how venture capital was changing, too. Companies were staying private longer, needed less capital, and they were growing faster than we had witnessed. He was all too familiar with this dynamic and its downsides.
Mike saw it when he ran corporate strategy and business development at Ask.com. He joined when it was still a private company and helped drive it through to a successful IPO in 1999. Having architected distribution deals like GoTo.com and acquisitions like Direct Hit, Mike was typically locked up from ever selling shares. When the dotcom bubble burst, he ended up owing far more in taxes than his shares would ever be worth.
When Mike was at JP Morgan Partners (the predecessor to Panorama), one of the first investments he led was a company that was growing incredibly rapidly, but faced a bumpy road from when it was first founded. Like most startups, the path to breakaway growth is not a linear one. But the company had found its stride and was transforming a generations-old industry with a new approach. Having proven the business model and now aggressively scaling the business the founding team was seeking some liquidity as part of the financing when Mike invested. However, that conversation wasn’t easy around the table at JPMP. The prevailing thinking a decade ago was: “Why are we putting money in while they’re taking money out?”
But the team was looking for something to solve for their particular personal situations. In the founder’s case, he had imposed upon himself a meager salary ever since he founded the company. The reality was that neither he nor his team was trying to “cash out.” They wanted to provide their families enough financial security to be able to focus on building the company for the long haul.
Upon reflection, that situation gave Mike the formula for how we could conduct secondary financings with fast-growing companies in a way that aligned everyone’s interests -- by providing enough liquidity for the team and early financial backers to release the pressure valve so that companies could focus on the long term.
The clincher for Mike to create Founders Circle with me was his deep desire to be a Founder and build something of real economic and human value. He had enthusiastically helped make other peoples’ businesses--advising as a lawyer and banker, operating as an executive, investing as a VC and angel. Now he was ready to build his own business. To be a Founder helping Founders. Nothing is more exhilarating for him than to work with the brilliant minds, ambitious drive and the shrewd instincts of those who see no alternative other than to change a corner of the world.