Joseph “Joe” Montana, iMFL co-founder and retired National Football League (NFL) quarterback, speaks during an interview in San Francisco, California, United States, Tuesday, April 30, 2013 .
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Joe Montana won his first Super Bowl as an NFL quarterback in 1982. Almost four decades later, he’s on the verge of getting his first IPO as a venture capitalist.
Montana, who led the San Francisco 49ers to four Super Bowl wins and was inducted into the National Football League Hall of Fame in 2000, has spent the past six years investing in start-ups through of his company, Liquid 2 Ventures. He started with a $ 28 million fund and is now closing his third fund which is almost three times the size.
One of Liquid 2’s first investments was announced in July 2015, when a code repository called GitLab raised a funding round of $ 1.5 million after going through the Y Combinator incubator program. GitLab’s valuation at the time was around $ 12 million, and other funding participants included Khosla Ventures and Ashton Kutcher.
On Thursday, GitLab is expected to debut on the Nasdaq with a market cap of nearly $ 10 billion, based on a price of $ 69, the high end of its range. Montana’s initial $ 100,000 investment, along with follow-on funding, is worth about $ 42 million at that price.
“We’re all pretty excited,” Montana, 65, said in an interview this week, while on vacation in Italy. “It’s going to be a monster for us.”
Joe Montana # 16 of the San Francisco 49ers celebrates after scoring against the Cincinnati Bengals in Super Bowl XVI on January 24, 1982 at the Silverdome in Pontiac, Michigan. The Niners won the Super Bowl 26-21.
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As famous start-up athletes have become a trend in Silicon Valley – from NBA stars Stephen Curry and Andre Iguodala to tennis legend Serena Williams – Montana has stepped into the game well. earlier. Prior to Liquid 2, Montana was involved with a company called HRJ, founded by ex-49ers stars Harris Barton and Ronnie Lott.
HRJ, which invested in other funds rather than directly in companies, collapsed in 2009 and was sued for alleged failure to meet its financial commitments.
But rather than return to the sport that won him fame in an executive role or as a broadcaster like so many other all-star quarterbacks, Montana has continued to invest. This time he took a very different route.
Convinced by Ron Conway
Ron Conway, the Silicon Valley super angel known for his lucrative bets on Google, Facebook and Airbnb, began showing Montana to the investment world at an early stage, primarily through Y Combinator. Montana, along with a growing crop of seed investors and celebrities, would attend the Y Combinator Demo Days, where entrepreneurs present slides of their businesses with consistently positive growth.
“We were trying to see what their secret sauce was and who they were looking at and what they were really looking for in start-ups,” Montana said, referring to Conway and his team. “He started taking us there, and we started doing a handful of investments here and there, and then he convinced me to set up a fund.”
In 2015, Conway was speaking to the last group of founders of the Y Combinator program, and he invited Montana to attend the event. It was there that Montana met GitLab CEO Sid Sijbrandij, a Dutch entrepreneur who had turned an open source project to help developers collaborate on code into a company that packaged software and sold it to businesses.
“We got together and said, ‘Hey, he’s a special guy,’” Montana said. “We signed up that night.”
GitLab had just come out of Y Combinator. During his presentation at Demo Day in March, Sijbrandij told the audience that his company has 10 employees and 800 contributors working on the open source project. GitLab was on track for annual sales of $ 1 million, he said, and paying customers included Apple, Cisco, Disney and Microsoft.
GitLab CEO Sid Sijbrandij at a corporate event in London
GitLab now employs more than 1,350 people in more than 65 countries, according to its prospectus. As it prepares to hit the public market on Thursday, GitLab’s annualized revenue stands at over $ 230 million. Second-quarter sales jumped 69% to $ 58.1 million
However, given that GitLab spends the equivalent of three-quarters of its revenue on sales and marketing, the company recorded a net loss of $ 40.2 million in the last quarter. A large portion of the marketing budget is spent on expanding its DevOps user base (the combination of software development and IT operations).
“To drive new customer growth, we intend to continue investing in sales and marketing, focusing on replacing DIY DevOps within large organizations,” the company said in the prospectus.
“Always listen to the pitches”
For Montana, GitLab marks its company’s first IPO, although it said “we have 12 or 13 more unicorns in the portfolio,” referring to start-ups valued at $ 1 billion or more . They include Anduril, the defense technology company run by Oculus co-founder Palmer Luckey, and autonomous vehicle testing start-up Applied Intuition.
Montana has three other partners in the business: Mike Miller, who co-founded Cloudant and sold it to IBM; Michael Ma, who sold a start-up to Google and became a product manager there; and Nate Montana, Joe’s son, who previously worked on Twitter.
Montana said he is involved with the fund on a day-to-day basis and attends partner meetings every Tuesday. He said his partners, who are more tech-savvy, handle much of the technical due diligence and deal research, while he focuses on helping wallets with connections in his network.
“Until the pandemic, I was still speaking all over the country,” Montana said, adding that he only started receiving a salary from the third fund. “I was talking to companies like SAP, Amex, Visa, and a lot of big companies, from big insurance companies to Burger King.”
Specific to GitLab, Montana said he put Sijbrandij in touch with a senior Visa executive early on, when the company was looking to strike a deal with the payment processor.
“I always listen to the pitches, I go to the pitches and I do all that,” Montana said. “But my time is better spent now helping connect these businesses as they mature.”
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