Silicon Valley venture firm August Capital held its annual holiday dinner on Thursday, December 6. The mood was festive, not only because of the season, but also because August had recently held a first close on its eighth fund after an unusually arduous process.
Four days later, the firm effectively imploded.
What follows is based on conversations with numerous August Capital employees, investors and other sources familiar with the situation. None were willing to speak on the record except for David Hornik, August's highest-profile current partner and the man who made a lot of very difficult phone calls that Sunday.
Background: August Capital was founded in 1995 by investors who had written some of the earliest checks for tech icons like Microsoft and Compaq. Hornik would join five years later, landing such portfolio companies as Splunk and Bill.com. He also created a very popular series of invite-only networking retreats called The Lobby.
Then came December 9, when Hornik informed most of August Capital's staff that he and fellow general partner Eric Carlborg had decided to immediately end fundraising and return the limited partner commitments on Fund VIII.
Why the decision was made remains very unclear to many at August.
The Securities & Exchange Commission is among several federal government agencies affected by the shutdown. This means that the promising slate of early 2019 IPOs could be delayed, as there's no one currently working to declare new registrations effective or to provide feedback on confidential filings.
The bottom line, from noted IPO advisor Lise Buyer:
"While timing is always uncertain, this makes it even more so. And of course companies that had planned to file early in the new year will need to wait for things to fire back up before they can submit their initial documents. Basically, it puts the whole filing part of the process on hold."
• Fund is Bond: Nearly four months ago, the growth equity team of Kleiner Perkins announced that it would spin off into its own firm. Now we've learned that Mary Meeker and crew are calling the new shop Bond (based on the traditional definition of ties that bind, not anything related to fixed income).
Photo illustration by Chesnot/Getty Images
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