General Catalyst Partners Teardown

A data-driven look at General Catalyst's investment financing history, funds, notable people, exits and industries of focus.

Founded in 2000, General Catalyst Partners is among Massachusetts most prominent venture capital firms. But after opening a new Palo Alto office towards the end of 2010, General Catalyst has been steadily increasing its presence on the West Coast, where today many of the firm’s most promising investments including AirBnB, Stripe and Snapchat are located.

We dig into the firm in this teardown of General Catalyst Partners.

Notes:

Where’s the data & viz from? 100% of the visualizations and data you see in this teardown are directly from the CB Insights platform’s Investor Analytics tool.
What’s a Teardown? A product teardown is the act of disassembling a product to understand its parts, functionality, etc. An investor teardown is analogous. We’re trying to understand a firm and what makes it tick by analyzing data around their financing strategy, investment thesis, key people, exit history, investment syndicates and more.

Specifically, this Teardown will analyze General Catalyst and their:

Funding Activity
Exit History
Fundraising History
Notable People
Geography and Industry
Increase in Deal Sizes
Follow-On Funding
Investment Syndicates

Funding Activity:

General Catalyst Partners typically invests across the investment maturity spectrum in a range of industries from health care technology to eCommerce to mobile payments. Since 2010, the firm’s investment activity has increased as might be expected after raising a new fund. Notable companies that have been funded include:

Stripe– Stripe is an online-payment system company that gives online merchants the ability to accept credit card payments. The company lets users build custom forms and makes sure all sensitive data is safe and secure.
Warby Parker – Warby Parker is a prescription glasses online discount retailer. Warby Parker lets users get glasses frames via the mail which they can try on and select from.
AirBnB – Airbnb is a community marketplace for people to list, discover, and book accommodations around the world online or from a mobile phone. The company has a current valuation of approximately $10 billion.

Looking at the graph below, we can see a sharp uptick in deals and funding made at the end of 2010. In addition to a new fund at around the time, the firm established its Palo Alto office then which may have also spurred increased investment activity.

Exit History:

General Catalyst Partners has seen increased exits in the last two years as seen in the graph below. Though the majority of companies exit through acquisition, a handful of companies have seen an IPO.

Notable exits include:

Imprivata – Imprivata is a converged Identity and Access Management (IAM) appliance company. General Catalyst invested at Series A, B, and C before their IPO.
Tremor Video – Tremor Video is provider of technology-driven video advertising solutions enabling brand advertisers to engage consumers across multiple internet-connected devices including computers, smartphones, tablets and connected TVs. General Catalyst Partners participated in a Series E investment before their IPO.
Demandware – The eCommerce engagement company went public in 2012. General Catalyst had invested beginning in the firm’s Series A round.
Kayak Software – Kayak Software is a technology-driven company committed to improving online travel. The company’s websites and mobile applications enable people to research and compare information from other travel websites in one fast and intuitive display. General Catalyst first invested in the Series A round. The company was valued at $1 billion at their IPO.

The firm has had a significant increase in exits in the recent past including 4 IPOs. The size of these exits has also grown dramatically, as seen in the graph below.

Fundraising History:

General Catalyst Partners has slowly raised the amount of money in each of their funds since 2003. The most recent fund, General Catalyst Group VII raised in the beginning of 2013 clocked in at $675 million. The fund’s performance success has helped in its ability to raise ever-larger funds. Given the positive relationship between fund size consistency over time and performance, it will be interesting to see how General Catalyst fairs with greater AUM.

Notable People:

Here’s a shortlist of some of the important people at General Catalyst:

Lawrence S. Bohn – A managing director at General Catalyst Partners involved with companies that do open source, cloud-based computing; advanced software and hardware systems, and SaaS business models. He has been with the firm since 2000. He successfully led NetGenesis and PC DOCS to IPOs and has been a part of several other technology companies. He currently sits on the board of companies such as BigCommerce, ownCloud, L2, and Hubspot among others.

Joel E. Cutler – Joel is one of the Managing Directors and Co-Founder of General Catalyst Partners. He has been with the company since 2000. He focuses on areas of information technology, consumer internet, e-commerce, and online travel. He currently sits on the board of Oscar Health Insurance, Handybook, Warby Parker, Fancy, and Ostrovok.

Hemant Taneja – Hemant is a Managing Director at General Catalyst Partners focusing on early stage energy solutions and next generation mobile platforms. He has been with General Catalyst Partners since 2002 and has notable been involved in the investments in Snapchat, Stripe, and ZenPayroll. He additionally sits on the board of TuneIn, HighFive, and Virtual Instruments. On the non-profit side, he is the co-founder of Advanced Energy Economy and sits on the board of Khan Academy.

Geography and Industry:

General Catalyst primarily invests in California and Massachusetts (where they have an office presence). In the last two years, Massachussets has maintained a relatively share of deals while both NY and Southern California have grown. Two of the firm’s prominent NY investments include Warby Parker and Oscar Health Insurance Co.

The General Catalyst portfolio is primarily focused on Internet and Mobile software companies. Recently, they have invested seed money into mobile marketing startup Singular, real-estate crowdfunding platform RealtyShares, and the financial technology company Kensho Technologies. However, they have also invested in companies in the biomedical and cleantech space such as BiOM (personal bionics) and Gridco Systems (power management systems).

Increase in Deal Size

With its increased AUM, General Catalyst’s average and median deal sizes have been trending up. While there has been a significant shift towards Series A funding, with a 75% increase year over year, the firm has made series B investments in some notable potential deca-corns ($10B valuation unicorns) including Snapchat and AirBnB. The firm still focuses more than a quarter of its investments at the seed stage.

Follow-On Funding:

General Catalyst Partners has kept a relatively consistent level of follow-on funding in companies since the beginning of 2012. The firm has for the most part kept a 50-50 balance between the number of new firms they fund and the old ones that they follow-on with. As a multi-stage fund, they are able to double down on winners such as the aforementioned Warby Parker (Series B, Series C), Oscar Health Insurance Co. (Seed, Seed II, Series A), and Good Data (Seed, Series A, Series B, Series C, Series D). With it’s recently raised fund, it would not be surprising to see the % of new deals increase but probably not markedly given GC’s consistency.

Investment Syndicates:

It’s interesting to note the large amount of overlap that General Catalyst Partners has with other big name firms, especially Andreessen Horowitz. Of the 19 companies that overlap with A16Z, some of General Catalyst’s co-investments include multiple rounds of AirBnB, Snapchat, Good Data, Highfive, and Summon. General Catalyst’s co-investments with A16Z have increased significantly in the last two years and are typically at the seed and Series A stages. General Catalyst also has invested in over 10 companies with prominent investors including: SV Angel, Sequoia Capital, CRV and Khosla Ventures. General Catalyst Partners also invests in many Y-combinator graduates, which includes many of the above as well as Zenefits, One Month, FlightCar, and ZenPayroll among others.