March 26, 2007
Google: exit of the VCs
The Silicon Valley moneymen are cutting their ties to Google. Last week came news that Michael Moritz of Sequoia Capital is stepping down from the board. Now the San Jose Mercury News reports that John Doerr of Kleiner Perkins has sold 1.1m shares (slightly more than 200,000 of which were sold on behalf of Kleiner clients.)
On the face of it, there doesn’t look to be anything too unusual about any of this - after all, Google has been a public company for more than two and a half years. The early investors need to cash in sometime.
Timing, though, is everything. Look at Moritz’s history as an investor. When Google was forced to cut the price range for its IPO in 2004 (remember the notorious Playboy interview and other slip-ups?) Sequoia backed away from selling any shares at all. It gambled (rightly) that the stock would take off later. During 2005, as Google first hit $500 (current price: $465) Moritz went on to sell nearly half his stake, while Doerr largely held on.
Is now the moment to head for the exits? The Google share price has gone nowhere for the past 15 months. It’s a truism of the venture capital business that the really big gains from investing in start-ups come in the years after they have gone public, not before. It seems that the Valley’s smart money has decided that the big profits have already been made.
