By Scott Martin
Lead Edge founder’s passion for tech led to deals in Alibaba, Uber, Spotify
Mitchell Green has a habit of speaking in machine gun-like blasts punctuated with wild-eyed excitement.
As the 36-year-old founder of Lead Edge Capital, a New York venture-capital firm with $1 billion under management, such frenetic energy and enthusiasm have helped score deals to crow about.
“It’s the energy, right? I have never met a guy that talks so fast and seems to make sense,” said Bill Grabe, a limited partner in Lead Edge funds and an advisory director for General Atlantic. “He’s made me a lot of money.”
Mr. Green’s passion for tech investments has landed deals in Alibaba, Uber and Spotify. People who know him say he is a force of nature who obsesses over things until he gets what he wants.
Getting a piece of Alibaba early was a pivotal moment for Mr. Green and the future of Lead Edge Capital.
“We returned about a billion dollars,” he said of the Alibaba stake.
On Wednesday, he co-led a $70 million investment in Duo Security at a $1.17 billion post-money valuation. The deal catapults the authentication and phishing security startup’s valuation to roughly four times what it was worth at its previous investment round, when it took in a $30 million Series C at a $241 million post-money valuation, according to an estimate from PitchBook Data Inc.
“This guy is an animal,” said Duo Security Chief Executive Dug Song. “The most well-connected among the Fortune 500, he’s super successful but has no ego about him.”
Duo’s spike in valuation spotlights a sizable multiple that comes on the tail end of one of the most overheated spells in startup investing, a period that has left a hangover of companies struggling to justify earlier valuations. Moreover, a tech unicorn in Michigan is even more of a rarity, far from Silicon Valley’s investor echo chamber.
Lead Edge’s investment in Duo Security fits squarely in line with the firm’s investment thesis: mid- to late-stage growth-equity stakes for two- to five-times returns in two to five years.
The Lead Edge team is slightly unconventional. Mr. Green’s high-octane conversations on startups—which can be unusually candid—appear to be the norm for the firm. Partners include Nimay Mehta, 27, and Brian Neider, 36, who, like Mr. Green, did cold calls earlier in their careers.
“The first concern I had was, is this scalable?” said Mr. Grabe. “Having seen the rest of the team, he seems able to clone himself.”
Mr. Green, who flies about 250,000 miles a year on SurfAir, touts an approach that differs from Silicon Valley firms, too. He doesn’t believe in using a marketing team to boost his image, and you wont see him all over stages of tech conferences seeking deal flow. For him, two things matter: finding unusually high-growth startups and helping them get customers through dogged networking. He insists LPs get involved in networking efforts for startups if they invest in his funds. He takes no board seats.
Unlike others in the industry, Mr. Green is unabashed stressing the importance of pumping the phones with cold calls. His team of six analysts—he’s adding two more—are cut from a Wall Street mold where relentless research is paramount and 80-hour weeks aren’t uncommon. “We are the only guys running a firm who have done the cold calling before,” he said.
And his rule of thumb on cold calls is simple: If they call you back right away, they are a dog. If they don’t call you back, those are the ones you want to work with. “We have shown up at people’s offices completely uninvited,” he said. “Most people actually appreciate persistence.”
Mr. Green doesn’t like to hear ‘no’ when he wants in on an investment that makes a lot of sense from his research. He’s very creative at finding founders or angel investors who might like to get liquidity, said Mr. Grabe. “You don’t know where he’s getting all this stuff from,” he said. “Mitchell is like a ferret—he’s in every hole.”