The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies, 2nd Edition

CHAPTER 15 Sourcing Investment Opportunities

“I want to find the next Facebook when it's just Mark Zuckerberg.”

—Kevin Rose, Google Ventures¹

Kevin Rose, a partner at Google Ventures, has fine-tuned the art of sourcing investments in Silicon Valley. When he found out that mobile payments company Square was raising a round, he reached out to Jack Dorsey, cofounder of Square. But the investment round was full, and Dorsey said Square didn't need more investors. Rose noticed that Square did not have a video demonstration of the product. He quickly put together a video to demonstrate the product and showed it to Dorsey, just as an FYI. Impressed, Dorsey turned around and invited Rose to invest in the so-called full Series A round.²

Kevin Efrusy of Accel Partners was ranked in top five of the Forbes Midas List of venture capital investors. After all, he sourced this great investment opportunity called Facebook for Accel Partners. Efrusy, who had served two separate stints as an entrepreneur-in-residence at Kleiner Perkins Caufield & Byers (KPCB), had joined Accel with the primary directive—find the next big thing in social start-ups. While Efrusy was on the hunt, he found his target two years into his career at Accel. Chi-Hua Chien, a graduate student doing research for Accel, pointed out this opportunity called Facebook to Efrusy, who never gave up till he trapped this elusive beast.

“Social networks had this dirty name,” he said in The Facebook Effect.³ Facebook had more than 20 ...