Redpoint Acquires GitHub’s Chief Technology Officer As A Partner In The VC Firm’s New $725 Million Growth Fund.
When Jason Warner joined Heroku, a buzzy cloud infrastructure company recently acquired by Salesforce, he met Scott Raney, a venture capitalist at Redpoint and an early investor in the startup. Soon after, Raney and his partners began referring technical firms to Warner for due diligence and advice. One that stood out was HashiCorp, the developer-focused cloud company that is now worth $5.1 billion.
Thus, when Warner, by then the chief technology officer of GitHub and an active angel investor, considered a full-time move into investing in late 2020, two years after GitHub’s $7.5 billion acquisition by Microsoft, he contacted Raney et al. “There are some firms that are just legendarily well-known, and then there are some firms that are sneakily good,” Warner explains. “Redpoint is one that could go unnoticed.”
Warner’s job now is to help change that. He has joined Redpoint as a new partner in the firm’s fourth growth fund, the $725 million Omega IV. “They are humble, intelligent, and eager,” Warner explains. “Their returns have historically been excellent. However, the types of businesses they invest in and the manner in which they approach founders were also critical to me.”
Redpoint’s recent performance, particularly in enterprise, appears to substantiate that assertion. The firm backed three of the top five companies on Forbes’ Cloud 100 list last year, amassing a stake in data platform Snowflake worth more than $5 billion during its initial public offering and investing in HashiCorp and Stripe during their respective Series B rounds. Add to that the exits of Twilio in 2016, Looker in 2020, and a slew of other unicorns. “The infrastructure world is dominated by a small number of firms,” says HashiCorp CEO David McJannet. “It’s difficult to deny their five-year success.”
Despite that run, Redpoint has eschewed the allure of billion-dollar funds popularized by Accel, Andreessen Horowitz, and Sequoia. “A lot of firms are amassing dollars at the moment, and they’re now focused on money movement,” says Raney, who joined Redpoint a year after the firm’s founding in 2000. “And we simply found that to be cynical. Our assessment is that this is still not a scale game.”
Rather than that, Redpoint is attempting to strike a balance between continuity with its funds and generational transition with its partnership – a feat that the firm and its supporters argue has been accomplished successfully thus far. Warner joins Redpoint following the departure of the firm’s founding partners and a portion of its second wave; into the ranks have stepped partners such as Alex Bard, Annie Kadavy, Logan Bartlett, and now Warner.
Kadavy, for example, was named to the Forbes 30 Under 30 list in venture capital in 2015 while working at CRV, then moved on to Uber before joining Redpoint. She says she appreciated joining a relatively small partnership of generalist investors who could leverage the firm’s history and former partners without interfering. Kadavy joined Redpoint and assumed responsibility for the firm’s relationship with Guild Education, a Denver-based adult education startup that recently tripled its valuation to $3.75 billion, thanks to an investment made by Raney.
When Guild’s CEO Rachel Carlson sought Series A funding, each of her two seed investors sent her a list of their top three firm fits. On both counts, Redpoint was the sole firm. And years after Raney introduced her to the lead investor in her next round of funding, Guild’s Series B, she met Kadavy on her first work trip following maternity leave following the birth of twins. Kadavy, who is also a recent mother, joined Carlson in discreetly pumping during the meeting.
“Being able to be my entire self, while also acknowledging how difficult it was to travel and be away from my children, and having a partner on the board going through the exact same thing, was the most humanizing, normalizing moment,” Carlson says.
Such handoffs are common at Redpoint, according to its partners. “We genuinely enjoy spending time together, which results in mutual respect and trust,” says Satish Dharmaraj, a partner since 2009 and this year’s No. 6 on Forbes’ Midas List.
Redpoint’s structure also has a colder, more environmentally friendly underpinning: its financial structure. According to its partners, Redpoint does not have a management company that sits above its individual funds and oversees the firm’s long-term strategy; rather, each fund is its own new economic entity. Each fund’s partners, even the newest ones, have the ability to write their own checks, participate in long-term planning, and form relationships with some of the firm’s limited partners in order to raise additional funds, a flat structure that Raney refers to as “a secret weapon.” “As a venture capitalist, you encourage these companies to think differently and take big, bold steps,” Raney explains. “However, the majority of venture firms do not operate in this manner internally; they are conservative by nature.”
None of this was lost on Warner, Redpoint’s newest hire, who was interviewing with other well-known firms prior to settling on Redpoint. (Warner declined to identify the runner-ups.) He intends to invest in his knowledge of open-source technology, developer tools, and infrastructure systems as a member of Redpoint’s growth team. Given Redpoint’s more open-ended structure, which allows for cross-domain investing and growth investors to invest in early-stage funds and vice versa, Warner may also look at fintech and cryptocurrency, which he argues are their own subsets of distributed systems, and dabble at earlier stages as well.
For Redpoint’s newer partners, there is an economic incentive to raise the firm’s profile after more than two decades – the firm has not historically marketed itself to the extent that newer competitors have, nor built as much of a name in consumer and social media startups – balanced against the responsibility of brand history. As Kadavy puts it, “the momentum is absolutely fantastic right now.” How do we continue to do so? How do we obtain additional?”