Kleiner Perkins Doubles iFund to $200 Million, Focuses on iPad

[Tilpots]

iControl is not a consumer based tech company anymore. And it's possibly making them and their backers much more money that way. Just because they're not listed in the most popular apps categories doesn't mean they aren't successful or a good investment.

Really though, why so upset about this company?

 

[iAmLegend]

Seriously, isn't there more important research to fund in this world?

"Sorry, we have no cure for you....but you can finally identify that song you keep hearing on TV!!!"

 

[Rocketman]

For the $100m invested the fact there has already been $330m of additional capital and over $100m in revenue (30% of which goes back to Apple). Even though this fund was initiated by internally motivated folks, and may thus have a lower rate of return that other venture funds, it has served its needs. It has jump started iPhone apps. It has started to have some companies go into the black. It has raised awareness for the platform. It has provided confidence in the platform other financial firms followed the lead of.

I suspect the second $100m is also provided by "internally motivated folks", but hey, they will make money several ways. The profits from selling the invested ventures on the exit strategy, the raise in value of Apple stock in their benefits plans, and of course a successful product launch so they can keep their jobs.

Rocketman

 

[deconstruct60]

[ and KPCB notes that the initial $100 million has been fully committed to 14 companies ...

In other words they have handed out all of the money from that version of the fund. It is effectively closed.

It is common practice after allocating all the money out of your current fund to raise money for a follow on fund for a new block of investments. Specific VC funds have a fixed liftetime. They typically have to be closed out after a fixed number of years ( for example 10 years. ).

So the 2008-2018 fund is fully committed and the only thing to do at this point is wait for it to close out. What are they suppose to do, twiddle their thumbs till 2018 until starting another around? No. Typically will look like.

2008-2018 launch and fully invest by 2009-11 (depending on economic conditions). Then 2010-2020 repeat. Then 2012-2022 repeat . As long as the VC firm can go out and get institutional, mr. megabucks, and other large monied investors to drop a new $100million on them every two years you just keep launching a steady stream of these.

Coinciding with the iPad only boosts the hype factor ( and perhaps greased the wheels on collecting the next round of money given the economy is tighter than average. Although there is lots of cash lying around with a small few of folks. ) If it were an "off" ( no super duper hype show ) year then would still raise a fund and invest again. ( or perhaps spread money around to firms that were going to do iPhone and Andriod and ... ) It may have been a smaller amount though.



You chunk and decouple the funds managing because if make some really bad calls ( nobody is perfect) and the fund blows up you have limited the damage ( *cough* Bears Strens and Lehman ). It is called risk management. A significant fraction of companies funded by a specific fund instance will never pay off. Nobody picks only winners.


Still unclear though if the low pricing pressure of the app store is going to allow some huge multiple winner to emerge out of these first two funds. There will be companies that survive and continue, but is anyone going to place huge multiple on a company selling $10.99 apps where apple is guaranteed to consume 30% of that (not to mention the tax man , development cost, advertising costs, ..... and no support contracts to amortize the customer base from, so constant stream of upgrades. ) ?

 

[Brometheus]

Seriously, isn't there more important research to fund in this world?

"Sorry, we have no cure for you....but you can finally identify that song you keep hearing on TV!!!"

An alternative scenario is possible."Sorry we have no cure for you; however, we have a clinical trial of a very promising drug. I can provide you with some information about this drug. Let me get my iPad. Okay, so take a look at this. See those structures? They're called receptors. See those things landing on the receptors? Those are growth factors. When they land on the receptors and bind to them, it causes a bunch of changes that make cancer cells grow faster. See what's happening? Amazing isn't it? Okay, now take a look at what happens when we block the receptor with another substance. See that? Right, the growth factor can't bind to the receptor. What do you think will happen next? Let's take a look. The cancer cells stop growing and some of them begin to die because they depend on that receptor to grow."
I think my point is pretty clear. Only about 3 to 5% of all cancer patients participate in clinical trials. This is a significant rate limiting step in the development of new drugs to fight cancer. Apps that allow doctors to communicate better with their patients may be very important and may help patients to better understand certain aspects of clinical research. As a result more of them may volunteer for clinical trials.

So I agree that nobody's life is saved by some game that allows you to shoot aliens in yellow bikinis. There's a whole world of apps that could play a role in curing someone's life. Just something to think about.

 

[deconstruct60]

the original iFund 2 yrs ago for the iPhone was $100M and obviously they made a great decision back then.

That remains to be seen. $100M spread over 14 companies means they got no average around $7M a piece.

If they all reached some liquidity event ( IPO or bought out or sold to another later stage VC firm ) and each returned $8M a piece on average then that fund would be a bust!

Some of those 14 companies are going to fail. So the average return on investment on those that get to a liquidity event has to be in the double digit percent return on investment. Nobody puts money in a VC found to get a 3% return. Even more so when the VC's charge a "management fee" of a couple % each year on the money in the fund. There has to be a couple of 'jackpot' winners for it to be a very successful fund if measured against normal VC fund metrics.

It will likely be another couple of years before it is really known just how well the fund is actually doing.

 

[*LTD*]

An alternative scenario is possible."Sorry we have no cure for you; however, we have a clinical trial of a very promising drug. I can provide you with some information about this drug. Let me get my iPad. Okay, so take a look at this. See those structures? They're called receptors. See those things landing on the receptors? Those are growth factors. When they land on the receptors and bind to them, it causes a bunch of changes that make cancer cells grow faster. See what's happening? Amazing isn't it? Okay, now take a look at what happens when we block the receptor with another substance. See that? Right, the growth factor can't bind to the receptor. What do you think will happen next? Let's take a look. The cancer cells stop growing and some of them begin to die because they depend on that receptor to grow."
I think my point is pretty clear. Only about 3 to 5% of all cancer patients participate in clinical trials. This is a significant rate limiting step in the development of new drugs to fight cancer. Apps that allow doctors to communicate better with their patients may be very important and may help patients to better understand certain aspects of clinical research. As a result more of them may volunteer for clinical trials.

So I agree that nobody's life is saved by some game that allows you to shoot aliens in yellow bikinis. There's a whole world of apps that could play a role in curing someone's life. Just something to think about.

Sir, can you be my dad?

(very well said!)

 

[deconstruct60]

I can provide you with some information about this drug. Let me get my iPad. .... Apps that allow doctors to communicate better with their patients may be very important and may help patients to better understand certain aspects of clinical research..

What??????????? some doctor requires an iPad to explain the benefits of some treatment. This persons life could be on the line and nothing else will do. Couldn't hold up a couple of printed diagrams. Couldn't use a laptop instead, play a DVD animation .... it just had to be an iPad or clueless patient won't take the medicine.

Get real. the iPad is a convenience of presentation in this example. It isn't critical.

Most patients don't want stuff on trial because they want something that works. Not something that some lab folks think might work and hope doesn't have any nasty long term side effects. It is on trial because you folks don't know! That one of the root cause issues why they avoid it. Some animated dog and pony show isn't going to cover that up for most of them.

 

[ImageWrangler]

Wonder how much is in their Palm fund or their BlackBerry fund?

Why throw money at the weak copying competition when you can throw money at the leader that innovates and makes the market that exists in which the others are merely pale swimmers?

Seems like smart investing, would you put your money in a copy or an original? The innovator or the ones trying to simply get a piece of the pie?

 

[deconstruct60]

Even though this fund was initiated by internally motivated folks, and may thus have a lower rate of return that other venture funds, it has served its needs.

If the fund is really a PR stunt than that pretty sad KPCB pimp out the firm that way. If it really isn't an investment fund but primarily a way to pump Apple stock, outsource Apple making more direct investments, and funnel some extra spending cash into KPCB's pockets. The amount of money they make should still be of interest to the Apple stockholders (if they are the primary backers of this fund by proxy).


Now if Apple basically outsourced the investing decisions to KPCB so that they could do a very good job. Then that is much better for the following reasons.

1. they give the stockholders more than reasonable return investment and access to investment skills vast majority couldn't hire on their own. Apple doesn't have to internally hire the folks to do this can stick to doing what they do instead of managing a giant stack of money. It isn't a bank ... yet.
(keep holding onto money and not doing much with vast majority of it. may become one. )

2. the long term prospects will look good for sustained investment in the platform. If this fund closes out and folks estimate that it was a bust. You can bet that other funds will dry up that invest in this as a specialized subniche. People only follow investment VC trends over the long term when they are successful. You may hustle a nice crowd for a couple of years with a gimmick but long term if it is just a hustle they will eventually figure it out.

 

[Dooger]

I wouldn't think a venture capital firm would put money into something unless there is a substantial possibility of a return on their investment. Which means far better minds than mine think that the iPhone/iPad ecosystem is going to grow and continue to be profitable, or even become more profitable.

Dude, Alan Greenspan thought that market regulation was wrong and look what happened. Just 'cos there's money behind it doesn't mean they're any more clairvoyant or intelligent than you. Give yourself some credit once in a while.
Anyway, it's just a big iPod Touch, could someone tell the Emperor to put some clothes on?

 

[Fast Shadow]

$100 million to 14 companies?

Way to spread the wealth, guys.

 

[Dooger]

An alternative scenario is possible."Sorry we have no cure for you; however, we have a clinical trial of a very promising drug. I can provide you with some information about this drug. Let me get my iPad. Okay, so take a look at this. See those structures? They're called receptors. See those things landing on the receptors? Those are growth factors. When they land on the receptors and bind to them, it causes a bunch of changes that make cancer cells grow faster. See what's happening? Amazing isn't it? Okay, now take a look at what happens when we block the receptor with another substance. See that? Right, the growth factor can't bind to the receptor. What do you think will happen next? Let's take a look. The cancer cells stop growing and some of them begin to die because they depend on that receptor to grow."
I think my point is pretty clear. Only about 3 to 5% of all cancer patients participate in clinical trials. This is a significant rate limiting step in the development of new drugs to fight cancer. Apps that allow doctors to communicate better with their patients may be very important and may help patients to better understand certain aspects of clinical research. As a result more of them may volunteer for clinical trials.

So I agree that nobody's life is saved by some game that allows you to shoot aliens in yellow bikinis. There's a whole world of apps that could play a role in curing someone's life. Just something to think about.

Oh and btw, deconstruct60 is right, what the hell is that? Cancer patients don't participate in trials for a multitude of reasons, but I'm pretty sure the shellshock that accompanies the news of malignancy diagnosis is one. If you think that whipping out an iPad is going to make any difference then you really need to get out of your little fanboy kingdom. "Oh my God Doc, for a second there when you said 'cancer' my world tore apart at the seams, but now you've got your big iPod out, everything makes sense"

There's no way you can have that sort of attitude and still have any contact with patients. I've had the horrible job of delivering cancer diagnoses which leads me to believe that you're a child with no experience in these matters. If that's the case then maybe you should just stay out of adult conversational topics as your statement is deplorable on so many levels.

 

[BTW]

I want some.

That's cool that they know where the money is. Do they have a similar Android fund?

 

[Brometheus]

What??????????? some doctor requires an iPad to explain the benefits of some treatment. This persons life could be on the line and nothing else will do. Couldn't hold up a couple of printed diagrams. Couldn't use a laptop instead, play a DVD animation .... it just had to be an iPad or clueless patient won't take the medicine.

Get real. the iPad is a convenience of presentation in this example. It isn't critical.

Most patients don't want stuff on trial because they want something that works. Not something that some lab folks think might work and hope doesn't have any nasty long term side effects. It is on trial because you folks don't know! That one of the root cause issues why they avoid it. Some animated dog and pony show isn't going to cover that up for most of them.

It's not like that at all. There are different settings in which doctors interact with their patients, and the iPad fits into some of them better than a laptop. The iPad is definitely not critical to these situations, because we've managed without it. It just gives us a tool that makes our work easier.

We have some truly promising new drugs to treat cancer. Drugs that are administered by mouth and are as safe as drugs that are used to treat hypertension. Nevertheless, it's still tough to get patients to participate in clinical trials. It's not because patients are clueless, and sometimes it's not the patient who is the problem. There are many reasons why patients do not participate in clinical trials. The reasons include patient-specific issues, including the issues that you mentioned. The reasons for non-participation also concern physicians who have chosen not to participate in clinical trials (they have to be investigators in the trial otherwise their patients have to be referred to another doctor). Some of the reasons for non-participation involve the patient-doctor dynamic and how different patients respond to different ways of communicating. An iPad allows for a new way of communicating using customized apps as well as files downloaded or streamed from a desktop computer.

I mentioned clinical trials because that is the focus of my career at this point in time. However, there are situations from my life that illustrate the advantage of a device that's much more portable than a laptop and easier for teaching or explaining things than an iPhone. If I get called to the emergency room to do a consultation for a patient who is severely anemic, I can explain to the medical student or resident why I suspect that Mrs. Smith has leukemia using my iPad. If Mrs. Smith is the kind of patient who wants lots of details about what is going to happen, I can show her how an appropriate video or set of images. Patients often leave the doctor's office perplexed because words alone cannot communicate certain ideas in a way that can be properly visualized. As I'm going from patient to patient on rounds, an iPad is a superior option to a laptop for explaining what's going on. Few things compare to the experience of telling the parents of a 4 year-old that his leukemia is in remission after only 4 weeks of treatment, and seeing their joyous reaction. The ability to show them pictures of bone marrow at the time of diagnosis and then when he is in remission makes it even more real to them, because there's often no outward sign of a response to treatment. We talk about the importance of bedside manner. Well, the act of taking time to explain medical concepts while sitting on the patient's bed while holding the left edge of the iPad while the patient holds the right edge (with the appropriately wide bezel) could really help to cement the patient-physician bond.

There are many, many other examples that I could cite. The form factor and well designed apps will take the iPad into many areas other than medicine, and truly change how we do so many things.

 

[Eric5h5]

Seriously, isn't there more important research to fund in this world?

"Sorry, we have no cure for you....but you can finally identify that song you keep hearing on TV!!!"

So...the only things anyone is ever allowed to spend money on are "important" things? You, personally, never read a book, never watch TV, never play a game, because there are always more important things you could be doing, like volunteering to help the homeless and so on? Never mind the fact that throwing more money at problems doesn't necessarily get them solved any faster.

Also, they are using the money with the intention of making more money in return. They're not just giving it away. Unless you think that they should be profiting off of medical research?

--Eric

 

[DanielSw]

Seriously, isn't there more important research to fund in this world?

"Sorry, we have no cure for you....but you can finally identify that song you keep hearing on TV!!!"

Seriously, without activities like this which aid well and able people who create new technology, companies, and jobs resulting a healthier more prosperous society, there would be no real wealth created to fund your "cures". As important as they are, what's MORE important is to re-build the economy in real terms with these venture capital initiatives.

Think about it.

 

[Brometheus]

Oh and btw, deconstruct60 is right, what the hell is that? Cancer patients don't participate in trials for a multitude of reasons, but I'm pretty sure the shellshock that accompanies the news of malignancy diagnosis is one. If you think that whipping out an iPad is going to make any difference then you really need to get out of your little fanboy kingdom. "Oh my God Doc, for a second there when you said 'cancer' my world tore apart at the seams, but now you've got your big iPod out, everything makes sense"

There's no way you can have that sort of attitude and still have any contact with patients. I've had the horrible job of delivering cancer diagnoses which leads me to believe that you're a child with no experience in these matters. If that's the case then maybe you should just stay out of adult conversational topics as your statement is deplorable on so many levels.

This is quite amusing. I think you would be very impressed if you saw my CV, my list of publications, and knew what I do for a living, but I want to preserve some degree of privacy. What I will admit to is being a proud fan of Apple and their products.

This is a bit of a teachable moment. You don't quite understand the process of recruiting cancer patients for a study. You mentioned "the shellshock that accompanies the news of malignancy". I agree that the news of a cancer diagnosis dramatically alters a person's ability to process information. However, the vast majority of these patients are not newly diagnosed. They've already been treated with the standard of care, but now the cancer has returned or is growing despite treatment. That is why an investigational drug is ethically appropriate.

By now you've read my previous post, so there's no point belaboring this issue. I really prefer to talk about tech issues, not medicine.

 

[BigJimmyC]

An alternative scenario is possible."Sorry we have no cure for you; however, we have a clinical trial of a very promising drug. I can provide you with some information about this drug. Let me get my iPad. Okay, so take a look at this. See those structures? They're called receptors. See those things landing on the receptors? Those are growth factors. When they land on the receptors and bind to them, it causes a bunch of changes that make cancer cells grow faster. See what's happening? Amazing isn't it? Okay, now take a look at what happens when we block the receptor with another substance. See that? Right, the growth factor can't bind to the receptor. What do you think will happen next? Let's take a look. The cancer cells stop growing and some of them begin to die because they depend on that receptor to grow."
I think my point is pretty clear. Only about 3 to 5% of all cancer patients participate in clinical trials. This is a significant rate limiting step in the development of new drugs to fight cancer. Apps that allow doctors to communicate better with their patients may be very important and may help patients to better understand certain aspects of clinical research. As a result more of them may volunteer for clinical trials.

So I agree that nobody's life is saved by some game that allows you to shoot aliens in yellow bikinis. There's a whole world of apps that could play a role in curing someone's life. Just something to think about.

So what does this have to do with the ipad again? Can you explain why this couldn't occur on any old desktop computer instead?

 

[Brometheus]

So what does this have to do with the ipad again? Can you explain why this couldn't occur on any old desktop computer instead?

No problem. Please see post #41. A cancer specialist at an academic institution is not limited to settings that allow for the use of a desktop computer. You're quite mobile. Sometimes you're in the outpatient clinic seeing patients. In that setting there's no computer in the room where you see your patients. It's a bit inconvenient to take your patients one after the other to the computers that your colleagues are using to do their work. A doctor in a private office has more flexibility around this issue. An iPad is very handy when you need a computer that's easy to transport. Sometimes you're going from room to room on rounds with an entourage of nurse practitioners, medical students, and fellows. In that setting an iPad is also more practical than a desktop. Sometimes you get called to the emergency room, or the intensive care unit, or the rehabilitation unit across the campus for a consultation. A desktop is often not optimal in that setting.
It's all about finding a use for a device that is portable, unlike a desktop, more portable than a laptop, and easier to share with others than an iPhone. Since it is not bogged down by a full operating system and a bunch of ports, it can be thin and light. That is the brave new world that the iPad is making possible.

 

[bobringer]

What??????????? some doctor requires an iPad to explain the benefits of some treatment. This persons life could be on the line and nothing else will do. Couldn't hold up a couple of printed diagrams. Couldn't use a laptop instead, play a DVD animation .... it just had to be an iPad or clueless patient won't take the medicine.

Get real. the iPad is a convenience of presentation in this example. It isn't critical.

Most patients don't want stuff on trial because they want something that works. Not something that some lab folks think might work and hope doesn't have any nasty long term side effects. It is on trial because you folks don't know! That one of the root cause issues why they avoid it. Some animated dog and pony show isn't going to cover that up for most of them.

Why are you here? Wouldn't the money you spent on your computer have been put to much better use donating it to cancer research? Selfish bastard.

 

[Dooger]

No problem. Please see post #41. A cancer specialist at an academic institution is not limited to settings that allow for the use of a desktop computer. You're quite mobile. Sometimes you're in the outpatient clinic seeing patients. In that setting there's no computer in the room where you see your patients. It's a bit inconvenient to take your patients one after the other to the computers that your colleagues are using to do their work. A doctor in a private office has more flexibility around this issue. An iPad is very handy when you need a computer that's easy to transport. Sometimes you're going from room to room on rounds with an entourage of nurse practitioners, medical students, and fellows. In that setting an iPad is also more practical than a desktop. Sometimes you get called to the emergency room, or the intensive care unit, or the rehabilitation unit across the campus for a consultation. A desktop is often not optimal in that setting.
It's all about finding a use for a device that is portable, unlike a desktop, more portable than a laptop, and easier to share with others than an iPhone. Since it is not bogged down by a full operating system and a bunch of ports, it can be thin and light. That is the brave new world that the iPad is making possible.

Sounds delightful. So are you planning on introducing an individual iPad into each room you work in or do you intend to use just the one, and vector bacteria around the hospital? If the microbiological team in my institution had any idea that someone was carrying a slab of metal and glass around the place while letting a multitude of people pore over it then I think they'd rightly go ballistic.
This is a bit of a teachable moment. Perhaps you don't understand that a microbe such as C. difficile doesn't just disappear when you wave an alcohol wipe at it. Think about it. Please.

 

[Jaro65]

Wow! $200M is going to go a long way! Looking forward to seeing what kind of interesting applications this will give rise to.

Sounds delightful. So are you planning on introducing an individual iPad into each room you work in or do you intend to use just the one, and vector bacteria around the hospital? If the microbiological team in my institution had any idea that someone was carrying a slab of metal and glass around the place while letting a multitude of people pore over it then I think they'd rightly go ballistic.
This is a bit of a teachable moment. Perhaps you don't understand that a microbe such as C. difficile doesn't just disappear when you wave an alcohol wipe at it. Think about it. Please.

You guys are like kids, really. ...And I mean no disrespect. Don't you have enough bickering at work already? Most of us come here to relax and enjoy the company of like-minded, Apple aficionados.

 

[Dooger]

You guys are like kids, really. ...And I mean no disrespect. Don't you have enough bickering at work already? Most of us come here to relax and enjoy the company of like-minded, Apple aficionados.

Haha! I know, I know. I just get a bit annoyed when people act like they were completely unable to function before the iPad came along. But Brom has a point, although it needs to be implemented carefully.
Anyway, sorry for disrupting your relaxation time!

 

[kernkraft]

+1

-1

If you haven't got anything to say, just don't say it. Besides, such posts are against MR rules.

Since 2002, you posted 85 times (minus deleted threads, I suppose). I can imagine that your rolleye has some big message. But what is it?