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Accel Partners’ Problems

November 16, 2004

Prestigious VC firms with big wins to their name don’t often get second-guessed, but that’s just what’s happing to Accel Partners. Venture Wire and the San Jose Mercury News have recently pondered Accel’s poor rate of return on its last fund raised in 2000, coupled with the raising of its most recent $400M fund, which has a greedy 30% carry rate.
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Jim Breyer: In a rough patch
The a:c’s take on Accel is that it has a solid reputation on the shoulders of face-man Jim Breyer. Breyer was the young golden-boy who single-handedly built Accel on the backs of Macromedia, UUNet, and Real Networks investments. We used to see a lot of him in the early days of the boom. He’s affable, intelligent, and polished. But Breyer has been lousy at recruiting and maintaining VCs who are as good and smart as he is (in fact, Breyer recently lost a seasoned lieutenant to another VC firm). Look at Kleiner Perkins, Sequoia Capital, New Enterprise Associates: they have benches like the NY Yankees – stars up and down the lineup.
Plunging the dagger a bit deeper: Jim, what have you done for us lately? His last homer was Real Networks. Sure Walmart.com is a great deal win, but it’s hardly a traditional startup success story. We hear that now that Jim has the keys to a Gulfstream, he’s constantly jetting around and hard for entrepreneurs to reach. With a 30% carry on $400M there’s no reason for him to settle down and work hard.
Read – Too Much Money in Silicon Valley (Silicon Beat)
Read – PBS Interview with Jim Breyer about the Dot-Com Bubble [PBS.com]

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