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When Jason Warner joined Heroku, a popular cloud infrastructure company that Salesforce bought, he quickly met Scott Raney, a venture capitalist at Redpoint who was an early investor in the startup. Soon, Raney and his partners were sending technical companies to Warner for screening and advice. One that stood out was HashiCorp, a cloud business for developers that is now worth $5.1 billion.
So, when Warner, who was now the chief technology officer of GitHub and an active angel investor, poked his head up in late 2020, two years after Microsoft bought GitHub for $7.5 billion, to think about making investing his full-time job, he called Raney and the others. Warner says, “There are some firms that are just legendary, and there are some that are sneakily good.” “Redpoint might not get much attention.”
Warner’s job now is to help make that better. He is now a partner in Omega IV, Redpoint’s fourth growth fund, which has $725 million in it. Warner says, “They’re humble, smart, and eager.” “Their profits have always been good in the past.” “But the kinds of companies they invest in and how they talk to founders were also very important to me.”
The recent success of Redpoint, especially in the enterprise market, seems to back that up. Last year, the firm backed three of the top five companies on Forbes’ Cloud 100 list. It bought a stake in data platform Snowflake worth more than $5 billion at its initial public offering (IPO), and it invested in HashiCorp and Stripe during their Series B rounds. Add this to the exits of Twilio, which went public in 2016, Looker, which Google bought in 2020, and a whole bunch of other unicorns. “Only a few companies are really involved in infrastructure,” says HashiCorp CEO David McJannet. “Their success over the last five years is hard to argue with.”
Even with this success, Redpoint has not been drawn to the billion-dollar funds that Accel, Andreessen Horowitz, Sequoia, and others have made more common. “Right now, a lot of companies are accumulating money, and now they’re all about moving money,” says Raney, who joined Redpoint in 2001, a year after it was founded. “And we just thought that was a bit mean.” “The way we see it, this is still not a scale game.”
Instead, Redpoint is trying to strike a balance between continuity with its funds and generational transition with its partnership. This is something the company and its supporters say it has done well so far. Warner joins Redpoint after some of its founding partners and some of its second wave left the company over time. Alex Bard, Annie Kadavy, Logan Bartlett, and now Warner are among the new partners.
Kadavy, for example, made the 2015 Forbes 30 Under 30 list in venture capital while working at CRV. He then left to work at Uber before joining Redpoint. She liked being part of a relatively small group of generalist investors who could use the firm’s history and past partners without them getting in the way. After joining Redpoint, Kadavy took over the firm’s relationship with Guild Education and its board seat. Guild Education is a Denver-based startup for adult education that recently tripled its value to $3.75 billion. Raney was the first person to invest in the company.
Rachel Carlson, the CEO of Guild, says that when she tried to get Series A funding, each of her two seed investors sent her a list of the top three firms that they thought would work well with Guild. On both, Redpoint was the only firm. Years after Raney introduced her to the lead investor in her next round of funding, Guild’s Series B, she met with Kadavy on her first work trip after giving birth to twins. During the meeting, both Kadavy and Carlson, who had recently given birth, quietly pumped while they talked.
Carlson says, “It was the most humanising and normalizing moment when I was able to be my whole self and talk about how hard it was to travel and be away from my kids, and I had a partner on the board going through the same thing.”
Redpoint’s partners insist that this kind of handoff happens all the time. Satish Dharmaraj, a partner since 2009 and No. 6 on this year’s Forbes Midas List, says, “We really enjoy spending time with each other, and that makes us respect and trust each other.”
The financial structure of Redpoint is a colder and greener part of its structure. Its partners say that Redpoint doesn’t have a management company that looks over each of its funds’ long-term plans. Instead, each fund is its own new economic entity.
Even the newest partners in each fund can write their own checks, take part in long-term planning, and build relationships with some of the firm’s limited partners to help raise money for the next funds. Raney calls this flat structure “a secret weapon.” Raney says, “When you work at a venture firm, you push these companies to think in new ways and take big risks.” “But most venture firms don’t act like that on the inside because they tend to be cautious.”
Warner, Redpoint’s newest hire, knew all of this. Before deciding to work for Redpoint, he met with other big-name firms to talk about possible jobs. Warner wouldn’t say who came in second or third. As a member of Redpoint’s growth team, he plans to invest in his knowledge of open-source technology, developer tools, and infrastructure systems. Given Redpoint’s more open-ended structure, which lets cross-domain investors and growth investors do deals from its early-stage funds and vice versa, Warner may also look at fintech and cryptocurrency, which he says are their own kinds of distributed systems, and try his hand at earlier stages.
For Redpoint’s newer partners, there is a financial incentive to raise the firm’s profile after more than 20 years. The firm hasn’t marketed itself as much as its newer competitors, nor has it built as much of a name in consumer and social media startups. At the same time, there is the responsibility for the brand’s history. “The momentum feels really good right now,” says Kadavy.
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