This week’s Big Deal analysis looks at how blow-out deals can create challenges along with opportunities.
Media group Disney is understood to have scaled back its financial commitment to its corporate venturing affiliate, Steamboat Ventures, after strong performance in its portfolio caused the fund to be closed relatively early.
Disney is understood to be providing $42.5m to Steamboat’s fifth fund instead of an expected $75m, reported by news provider Fortune in January last year.
This is 50% of the Steamboat Fund V’s total, after the firm filed with US regulators last month that it had raised $85m from 13 limited partners.
The fund was closed in December after one of the fifth fund’s portfolio companies, US-based Woodman Labs, maker of the GoPro sports camera, raised $200m from technology company Foxconn at a $2.25bn valuation. Existing limited partners often rail against new investors coming in after a home run success and, given its closure at $85m, a sixth fundraising perhaps as early as next year could be expected.
A source close to the fundraising process said: “Steamboat’s decision to close at $85m and not take additional capital is a function of the remarkably strong performance of the investments already in the fund and gains already realized, for example GoPro, where Steamboat’s stake is already valued at more than 100% of the entire fund, as well as other portfolio companies like 51F Fanli and Cocoa China, which are also experiencing rapid growth and value appreciation.”
Steamboat had refocused its investment strategy from the US to China after John Ball, the firm’s head, moved to Hong Kong and US partners Scott Hilleboe, Beau Laskey and Dan Beldy left while David Min moved into Disney’s strategic innovations team. It was Laskey, who has set up Knightship Ventures with Beldy, had struck the GoPro deal and Steamboat had seen an earlier success in the space, Cisco’s $590m purchase of Steamboat-backed Pure Digital Technologies, maker of the Flip camera.
The corporate venturing affiliate said it would continue doing some deals in the US and a source close to the firm said it still had plenty of dry powder to make new deals even if the team that struck its previous successes has mainly moved on, which could create challenges for the next fund.
Yet given the blow-out success of GoPro, one has to imagine many investors, including Hollywood’s Disney, will be eagerly awaiting the next instalment in SteamBoat’s fundraising, even if the original US team has largely moved on. A new deal-making cast can always be found, as Hollywood veterans well-know, but whether the audience still feels the same is less certain.
