Benchmark Capital Scores With Instagram, Demandforce and IPOs

The hits keep coming for Benchmark Capital.
Following Facebook’s $1 billion acquisition of Instagram earlier this month, the venture firm scored again today after Intuit agreed to buy e-mail marketer Demandforce for $423.5 million. Benchmark, the Silicon Valley firm that gained fame from its early investment in EBay, was the biggest institutional investor in Instagram and Demandforce.

It’s not just acquisitions. Benchmark owns a $56 million stake in software maker Proofpoint, which sold shares to the public last week, marking the firm’s fifth IPO in the past 13 months. Adding in the others — Yelp, Servicesource, Zillow and Zipcar — Benchmark owns about $500 million of stock in newly-public companies.
Like any venture firm, Benchmark has had its share of duds. It famously invested in Friendster, the social-networking site that beat Facebook to the market only to get trounced by the now $100 billion juggernaut. The firm also bought a stake in solar panel maker Nanosolar, which is struggling to compete with low-cost Asian manufacturers.
For obvious reasons, the partners prefer to talk about what’s working. Bill Gurley, a 13-year veteran at Benchmark, sounded off on the public market wins at a conference on April 4 in Menlo Park. He said the firm is having its best run in the IPO market in more than a decade.
“It’s becoming acceptable and interesting again for entrepreneurs to be public,” he said. “We’ve had a long period where there was almost a complete lack of interest in being public.”
And with the dollars being shelled out for Instagram and Demandforce, he’ll take that too.


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