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| Volume 1, Issue 5 • February - March 2007 |
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Deep Pockets, Large Heart:
IDG Ventures Boston's Michael Greeley is Never Giving up on the Entrepreneur
With Michael Greeley’s educational and business pedigree—B.A. in chemistry from Williams, Harvard Business School, Wasserstein Perella & Co, M&A’s at Morgan Stanley & Co, LBO’s at Credit Suisse First Boston--he could no doubt have numerous corner offices--a birds-eye view of the ships sailing up the Hudson, or a level view of The Peak from Hong Kong’s International Finance Center, a driver to free him up to ponder how to invest his annual bonus--private jet service.
But Greeley likes to keep his feet on the ground and so his day revolves around reading business plans from eager entrepreneurs, searching for talent for his portfolio companies and troubleshooting issues which arise with any busy venture fund, as General Partner at IDG Ventures Boston.
When asked why he’d rather toil in early-stage venture capital then reap the cash flowing into private equity funds and investment banks, he’s philosophical. “It’s sort of a motherhood and apple pie kind of thing,” he says. “I get to work with incredible people, people trying to change the world. I’m driven by working with them rather than doing a leveraged buy-out. Across the board these are extraordinary people and it’s gratifying.”
So gratifying that Greeley was moved to launch the fund in 2001 while the coals were still simmering from the dot.com meltdown. Greeley had been at Polaris Ventures during the boom. Despite the downturn he saw an opportunity.
As it happened, so did Pat McGovern, founder of publishing empire IDG, who put up a third of what is now $1.4 billion dollar family of funds. “After the bubble we thought is was a great opportunity to launch a fund,” Greeley says. “We assembled a team from the five top funds on the east coast.”
From the beginning they operated differently from traditional venture funds, investing as little as $50,000 in young, pre-revenue, companies in which they saw promise. “We only did that if we knew we wanted to invest at a later state,” Greeley says. Still, it’s a long distance for an entrepreneur to get out of the garage to garnering enough revenue to meet the criteria of many venture funds. Not to mention it’s the weakest link in the funding chain.
IDG Ventures became the parent fund of funds operating in China, India, Vietnam and San Francisco, as well as Boston with $1.4 billion under management. McGovern is no longer the majority investor in the Boston fund, but shares the space with limited partners such as Yale and Princeton. Half the Boston fund of $280 million is invested.
Next to cash, Greeley considers recruitment support as his fund’s biggest asset to its portfolio companies. “We’re aggressively networked in the market,” he says. “Half of what I do is recruiting.” Sometimes they will engage the services of a search firm, particularly when looking for technologists. “For CEO and down we can go within our network,” he says. The balance of his time revolves around dealing with strategic issues and the mundane, like compensation and how to choose an audit firm.
Going into the investment Greeley and his team are aware that there will need to be transitions in management as the company grows. “It usually happens between seed and series A funding,” he says. “It’s really tricky and the dirty secret of the VC business that the people we invest in are not always there at the end.”
Greeley tries to be transparent about this from the start and often the founders understand their equity might be worth more if experienced management is growing the company. “There are very many models which allow for a graceful transition,” he says, “like moving the founder over from CEO to CTO.”
Recruiting is all the more complex because despite the global-minded world we live in people are still regional minded when it comes to work. “Relocation is tricky especially to smaller markets because candidates don’t perceive there to be much of a safety net of other jobs and realize their contacts and network will be less relevant,” he says. “It is also expensive and time consuming to relocate someone. And there are all the other family issues like school, friends, etc.”
Of course the other role Greeley plays is board member. Currently, he represents his firm on the boards of Blue Tarp,
MicroCHIPS, Predictive Biosciences, Protein Forest, VidSys, T2 Biosystems and
Magen BioSciences. At this point in his career as a VC, he is confident about what he can bring to the table as a board member. “There are pretty clear patterns through the life-cycle of these companies so I’m able to draw from my experience to help mitigate issues,” he says. He adds that recruiting and raising the next round seem to always be at the forefront in terms of the company “to do” list.
Greeley has had what he considers two “great” wins as a VC. He was a founding investor in FleetCor and served as CEO of the company for six months to help reposition it. It was recently sold to Bain Capital for a “very big price. “ The other was Global TeleSystem which provided telephony services in Europe in the 1990’s. “a big piece of the company was in Russia,” he says. “Which was great to see come of age.”
Outside of the office Greeley is similarly over-achieving serving as the President of the New England Venture Capital Association, as a member of the Executive Advisory Council for Mass General Hospital for Children and as a trustee on the investment committee of the Massachusetts Eye and Ear Infirmary.
In the spirit of keeping his feet on the ground, he’s an avid runner and has completed five marathons in the past few years. He is politically active and is married with two children, Mikayla, age 10 and Jackson, age 6. His wife, Kathy Burns, was a classmate in business school. She currently works in real estate and hotel development for New England Development. He concedes: “She is more impressive than I am."
Greeley was born in New York City, but moved as a child to Hong Kong for seven years because his father was in investment banking. The experience contributed to his wanderlust. He goes back one or two times a year and often travels internationally with his family, which may be why he forfeited a career in chemistry for finance. “After four years in a lab I was convinced that I could not do that for the rest of my career,” he says.
Despite his success and outside interests, Greeley isn’t leaving the VC world any time soon. “This is a great job,” he says. “You meet incredibly talented and passionate people who want to change the world. And you get to assist them in a small way.”
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Have you heard?
In January, Boca Raton-based NovaVision raised $20 million in Series C financing from Chicago Growth Partners, Johnson & Johnson Development Corporation, and Oakwood Medical Investors, Tullis-Dickerson & Co., Inc., Noro-Moseley Partners and Crossbow Ventures...
In December Timonium, Md.-based I4 Commerce raised $640 million in debt financing from Citigroup’s Corporate and Investment Banking division...
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In fourth quarter 2006, Research Triangle Park-based Cropsolution closed on $5 million in a Series B financing round. The round was co-led by The Aurora Funds and ATP Capital with participation from other investors...Lexington, Mass.-based Predictive Biosciences raised $10 million in Series A financing via Highland Capital Partners and IDG Ventures Boston.
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