The Menlo Park-based VC firm doubled down on its commitment to China with a new $180M fund. Already the firm has participated in 19 deals to Chinese companies since 2013.
Redpoint Ventures is a Menlo Park, California-based venture capital firm investing in seed, early, and growth-stage startups. Redpoint manages over $4B, has funded well over 450 companies, and has invested in 140+ companies that have gone on to exit via IPO or M&A. Founded in 1999, the firm has invested in breakout companies such as Twilio, Stripe, Zendesk, and Netflix.
Redpoint has had 6 exits this year through 12/15/16, including the $1.2B IPO of Twilio and 5 M&A exits, including the acquisitions of Akana, Machinima, and Vurb. And the firm has seen exit activity pick up nicely in recent years. However, the 2016 total falls behind exit levels seen in the two years prior. Last year the firm saw 13 exits, including the $3.1B IPO of Pure Storage. And in 2014, Redpoint saw 15 exits, including the IPOs of Zendesk ($631B), Just-Eat ($2.4B), and 2U ($508M).
Redpoint tends to invest in consumer, marketplace, and enterprise businesses such as mortgage startup Clara and predictive sales and marketing platform Infer. Building on a history of investing in China-based startups, in November the firm closed an initial $180M fund dedicated to China-based companies. Given Redpoint’s active exit portfolio and high-profile investments, we decided to dig into their investment strategy, co-investors, and exit history.
Notes on the analysis:
- Where are the data & visualizations 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 are trying to understand a firm and what makes it tick by analyzing data around its financing strategy, investment thesis, exit history, investment syndicates, and more.
- This analysis does not include Redpoint funds managed independently from the main funds such as Redpoint eventures in Brazil and Redpoint China.
We’ll discuss trends and highlights in Redpoint’s portfolio over the past few years by analyzing the following dimensions:
- Financing activity
- Deal size
- Exit activity
- Industry heatmap
- Financing by stage
- Geography breakdown
- Fund size
- Investment syndicates
The large majority of Redpoint’s investments have been to Series A, B, and C stage companies, with seed and late-stage companies attracting less attention. Since hitting a 5-year peak in deal activity in 2014 with 56 deals closed, Redpoint appears to be pulling back. Since then, we have seen yearly declines in deal activity, with 2016 on track to come in lower than 2015. Further, deals to seed-stage companies have been steadily declining since 2014, with only 2 completed so far this year.
In 2016, Redpoint did not stray from its investment focus, with 80% of deal flow going to Series A, B, and C stage companies. Notable deals this year include companies from each of Redpoint’s main sectors:
- Marketplaces: Online used-car transaction platform RenRenChe. Redpoint Ventures participated in the company’s recent $150M Series D round along with investors including Ceyuan Ventures, Prometheus Capital, and Xinjun Capital. Redpoint was the sole investor in the Chinese company’s Series A and followed-on in Series B and C rounds. RenRenChe has raised $255M to-date.
- Enterprise: Software-defined data platform provider Springpath. Redpoint participated in its $52M Series C round along with Cisco Investments, NEA, and Sequoia Capital. Redpoint had previously participated in Springpath’s 2015 Series B along with NEA and Sequoia.
- Consumer: Router developer Eero. Redpoint participated in the company’s $50M Series B round along with investors including First Round Capital, Index Ventures, and Playground Ventures. Redpoint had previously invested in its 2015 Series A.
Below is a graph of Redpoint’s monthly investment participation (deal count, as well as total funding from the rounds Redpoint participated in, taken from their profile on CB Insights).
Redpoint generally keeps the average size of the deals it participates in below $30M, as the firm did from Q4’11 through Q4’14. However, the firm has recently ventured into larger deals. In 5 of the past 7 quarters, the firm has seen the average size of deals go well above $30M.
The peaks in Q1’15 and Q2’16 are partly explained by large $100M+ rounds to subscription commerce tools company Zuora and social networking site Nextdoor. Both rounds were co-invested with Benchmark, Greylock Partners, and Shasta Ventures.
The largest deals Redpoint has participated in since 2011 include:
- Enterprise IT storage provider Pure Storage: Redpoint invested in the company’s $225M Series F in 2014 along with investors such as Greylock Partners, Index Ventures, and Tiger Global Management. Pure Storage went on to IPO in 2015 valued at $3.1B.
- Online video streaming service Baidu Video: Redpoint participated in a $155M round to the company in April of this year along with Baidu, New Culture Media, and SAIF Partners. Baidu Video is a spin-off of the Chinese search engine Baidu.
- Online used-car marketplace RenRenChe: Redpoint participated in the company’s $150M Series D in September of this year along with investors including Prometheus Capital, Ceyuan Ventures, and Xinjun Capital. Deals to Baidu and RenRenChe are part of Redpoint’s larger strategy to actively invest in China-based businesses. Since 2004, Redpoint has participated in deals to 29 companies in China.
Exits by companies in the Redpoint portfolio have been picking over the past 2 years, even as 2016 has seen somewhat of a slowdown. Since 2000, Redpoint Ventures has seen 7 exits via IPO, 71% of which occurred since 2014, and 99 by M&A. Recently the company saw the acquisition of Akana by Rogue Wave Software, the merger of Beepi with Autodata Group, and the $1.23B IPO of Twilio.
The firm is on track for plenty more exits in the coming years as well. Companies in the Redpoint portfolio that are also in our 2017 Tech IPO Pipeline report include Stripe, Nextdoor, and Datameer, among 13 others.
A few of Redpoint’s largest exits since 2002 include:
- Online restaurant delivery service Just-Eat: Valued at $2.44B at the time of its 2014 IPO. Redpoint initially invested in the company’s $48M Series B in 2011 and again in its Series C.
- Vacation-home rental site HomeAway: Valued at $2.16B at the time of its 2011 IPO. Redpoint invested early, as part of the $49M Series A in 2005 and followed-up in the company’s Series B and Series D rounds.
- Enterprise IT storage company Pure Storage: Valued at $3.1B at the time of its 2015 IPO. Redpoint initially invested in the company’s 2011 Series C and again in its Series D, Series E, and Series F rounds.
The majority of Redpoint’s portfolio is focused on the internet sector, but the firm has occasionally diversified into mobile, energy & utilities, as well as consumer products.
In the internet sector, Redpoint has focused on software & services and e-commerce. Within e-commerce, broken down on the left, Redpoint has invested mainly in marketplaces such as Homejoy or Flexe and apparel/accessory companies such as thredUP. Within internet software & services, on the right, Redpoint has given priority to ad-tech startups such as Extole and business intelligence startups such as quantiFind.
Financing by stage
Nearly half of all Redpoint investments over the past 3 years have been in early to mid-stage companies seeking Series A or B financing. However, the firm has been known to periodically invest in Series D+ rounds such as RenRenChe‘s $150M Series D round in September. Redpoint had previously invested in RenRenChe’s Series A, B, and C rounds.
Consistent with the data above, deal activity in all stages has been declining over the last three years, with the exception of Series C rounds. Redpoint has participated in 24 Series C rounds since 2014, the largest being the $775M Series C to Beijing-based mobile video company Yixia.
In October Redpoint Ventures announced the closing of a dedicated $180M fund to invest in early-stage startups in China. However, the firm has been actively investing in the country for years.
From 2009-2012, Redpoint completed 9 deals to Chinese startups. Since then, the firm has doubled its commitment to the region, completing 18 deals from 2013-2016 year-to-date. The largest rounds have been to RenRenChe, Baidu Video, and Apus Group.
Redpoint is currently investing out of its 6th fund. The firm has consistently raised $400M for each fund with the exception of its new Redpoint China I fund for which the firm raised $180M. The fund will be led by partners David Yuan, Tony Wu, and Reggie Zhang, all based in China.
Since 2010, each new fund has been raised faster than the previous fund, demonstrating an active pipeline. Redpoint Ventures IV was raised 4 years after the previous fund. Three years later the firm raised Redpoint Ventures V, and 2 years later Redpoint Ventures VI.
Redpoint Ventures most often invests alongside Palo Alto-based Accel Partners, having joint investments in 37 deals with the firm. Most recently, the two co-invested in the AI-powered sales automation platform Tact.
Redpoint tends to invest after early-stage investors SV Angel and Y Combinator. On 10 different occasions, General Catalyst Partners has invested after Redpoint.
The majority of Redpoint’s exits have occurred within 6 years, most after having raised less than $50M. However, companies have occasionally remained in the firm’s portfolio for upwards of 10 years.
Redpoint recently saw the high-profile IPO of Twilio. Twilio was in the Redpoint portfolio since 2013 and was 1 of 5 portfolio companies that raised over $200M prior to exit.
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