Moving Into Social Web, Menlo Ventures Adds Partner

Menlo Ventures had brought in a partner from outside the firm just twice in its 35-year history.

Shervin Pishevar — an entrepreneur and angel investor with no formal venture capital experience — is now No. 3 after joining the team this week, in a sign that Menlo is planning a major push into the social Web.

“We’re seeing more opportunity in consumer than we can keep up with, which is why someone like Shervin will be a huge asset,” said Shawn T. Carolan, a managing director at Menlo Ventures. “The digital social fabric that binds people will affect Internet services in many different ways. This is not a few-year trend, this is a decades-long trend.”

Menlo, which has $4 billion in assets, has excelled in finding start-ups in the less glitzy corners of technology like enterprise software and networking solutions. It was the largest investor in 3Par, a data storage company bought by Hewlett-Packard for $2.35 billion last year after a heated bidding war with Dell.

But unlike some of its fellow deep-pocketed rivals on Sand Hill Road in Silicon Valley, Menlo is not a big player in the much-hyped social networking space. The firm doesn’t have stakes in Facebook, Zynga or Groupon — all of which are expected to have big offerings in the next 12 months.

Now, Menlo is playing catch-up.
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With the addition of Mr. Pishevar, the firm is hoping to improve its stature among young Web entrepreneurs, who have built the core of the social Internet. Mr. Pishevar’s main focus will be to create an incubator to nurture talent and identify investment opportunities early.

“Today, entrepreneurs need less capital to start their businesses, which means that there is a higher volume of companies getting started,” Mr. Pishevar said. “In that noise, it’s going to be incredibly important to have a great eye for exceptional founders and to build a circle of trust that connects all those people.”

With capital sloshing around the market, Menlo and other players are under pressure to court start-ups long before their first funding rounds. To help attract talent, firms are hiring well-known entrepreneurs and Internet executives. The founder of LinkedIn, Reid Hoffman, is at Greylock Partners. Matt Cohler, one of the earliest Facebook employees, is a general partner at Benchmark Capital.

Mr. Pishevar, 37, fled his native Iran during the country’s brutal war in the 1980s. He later became a serial entrepreneur. At 23, he introduced a Web-based operating system called WebOS, following soon after with Webs, a publishing platform, and later SGN, which he sold in April to MindJolt. As an angel investor, he has invested in roughly 40 start-ups including Aardvark, a social search service that was sold to Google, and Milo, a local shopping application that was sold to eBay for $75 million last year.

Mr. Pishevar is often described as energetic and philosophical, and his Rolodex includes a global mix of investors, politicians, celebrities and founders in Silicon Valley, Los Angeles, Washington, London and Moscow. Mr. Pishevar, for example, connected Russian billionaire Yuri Milner with Evan Reas, the founder of LAL, more popularly known as LikeALittle, a college social networking site. Both Mr. Pishevar and Mr. Milner ended up investing in the site.

“Shervin has a good instinct for successful entrepreneurs and deeply understands current Internet trends,” Mr. Milner said.

As he did with Mr. Reas, Mr. Pishevar often helps young entrepreneurs navigate Silicon Valley, dispensing words of advice on financing and operations. He will even drive them to investor meetings.

Mr. Pishevar recently introduced the founder of Klout, Joe Fernandez, to Bobby Yazdani, an angel investor. Mr. Yazdani eventually bought a stake in Klout, a start-up that measures the influence of Twitter users, and initiated a meeting for it with venture capital firm Kleiner Perkins Caufield & Byers, which is now a top investor.

Last year, Mr. Pishevar also helped secure a visa for Andrey Ternovskiy, the teenage founder of Chatroulette, a video-chatting site. He collected letters of support from his friends, including the actor and technology investor
Ashton Kutcher and Sean Parker, the former Facebook president.

“What sets Shervin apart is that he cares more for people than technology,” said Mr. Kutcher, who has invested alongside Mr. Pishevar. “He has all the understanding of technical infrastructure and social gaming mechanisms, but most importantly he has an understanding of people and a genuine care for their well being.”

Mr. Pishevar said he hoped to formalize his work with entrepreneurs at Menlo by creating a “people-focused” incubator, allowing founders at various stages to connect with other entrepreneurs and learn about best practices. Although the structure is still being worked out, Mr. Pishevar says the program will begin later this year.

“We want to bring founders into a trusted circle and help them incubate their ideas,” he said. “We also want to develop a structure and methodology that can help incredible founders scale across the stages.”

As part of the program, Mr. Pishevar is putting together an elite network of mentors to create a “Jedi council of incredible entrepreneurs.” The exclusive network will host gatherings, work together to solve problems and help the founders in the program.

“The greats are going to be harder to find in this world,” Mr. Pishevar said. “This is an incredibly human endeavor.”
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