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Client Spotlight: VC Investor David Blumberg on 25 Years of Evolution in Tech Investing

Since launching the early-stage venture capital firm  Blumberg Capital more than 25 years ago, David Blumberg has shepherded dozens of early-stage companies from growth to acquisition or initial public offering. We recently spoke with David about his career path, his focus on young technology companies, the evolution of the industry and his advice for soon-to-be entrepreneurs.

Silicon Valley is a place that gives you the opportunity to try new things and be different.

You studied government at Harvard College yet pursued investing. Why the change?
I went to Harvard College thinking I wanted to work in government or as a diplomat after going to law school. Then I spent several summers as an intern in Washington D.C. watching how the process really works and was turned off by the ineffectiveness and inefficiency of it all. Meanwhile, I launched a company, Harvard Distribution Services, which was surprisingly exciting and fulfilling especially in contrast to my experience with Washington bureaucracy. Instead of going to law school, I applied and was accepted to the Stanford Graduate School of Business. I took a deferral to earn my GSB tuition at T. Rowe Price doing research analysis on high-tech companies. This experience afforded me the opportunity to meet many great mentors such as Abby Joseph Cohen, Ed Mathias and Frederick Adler, one of the early leading venture capitalists and one of the only ones investing internationally. Later, when I was at Stanford, he insisted I join him as a summer intern — and that led to my career in venture capital. I had very specific career goals for international venture capital, so it was a dream come true.

Did you have any doubts about your career path?
I never wanted to work for one company for 40 years and retire with a gold watch. While I enjoy building companies and being an entrepreneur, I wanted to take a portfolio approach. Starting a venture capital firm allowed me to strike that perfect balance.  Along the way, there have been tough times and exhilarating times — the highs and lows that most entrepreneurs experience — but overall, I feel so blessed and grateful to those who helped all along the journey.

How did you transition from your role at an established private investment firm to running your own VC firm?
I began investing with a few family offices and a Japanese technology distributor. We invested in nine companies, four of which went public. Nearly all the investments were in business-to-business companies. One of the companies I worked with was a cybersecurity vendor named Check Point Software Technologies (CHKP), and I jumped in as an operator leading business development from the launch in both the U.S. and Japan. That was in the early 1990s, when the Internet was still very young and mostly unknown — even among tech companies. Through that amazing rocket ship ride, I gained expertise in cybersecurity, which is still an area of focus for us at Blumberg Capital.

As an investor, what do you find compelling about cybersecurity?
It’s a fascinating cat-and-mouse game. Every new platform brings new functionality and new vulnerabilities — hence a demand for new solutions. The model used to be to try to build a perimeter wall to protect information on the network, but now the perimeter has dissolved and security has become more complex, crucial and costly. Startups are increasingly dominating innovation of cutting-edge solutions so even industry cybersecurity incumbents must partner with startups or acquire them.

What are the trends driving technology investing today?
It is much easier, faster and cheaper to build a tech company now than ever before, which has helped us as early-stage investors. Developments such as virtualization and cloud infrastructure have dramatically reduced spending on infrastructure at the outset. In addition, SaaS model selling and self-service consumer platforms mean less sales friction, especially when introducing new technology. The growth of new platforms such as social media, mobile and Internet of Things, has created a vast new set of opportunities — including cybersecurity, enterprise applications, e-commerce infrastructure, fintech and marketplaces, among others.  Meanwhile, emerging markets have grown economically, opened more doors globally and empowered entrepreneurs and consumers to learn like never before via the Internet.

Through all of this, you’ve stayed focused on early-stage companies. Why?
It’s hard work, but it’s more fun! Honestly, I get a kick out of being involved at the early stage because as a VC, you can really help make a positive impact. And the energy is electric. I find it rewarding and profitable to help small startups become more successful on their journey. And because of the acceleration and shortening of the product cycle, the pendulum has swung toward better outcomes for nimble and highly motivated tech companies.

What advice do you have for soon-to-be or new entrepreneurs?
I want to tell young entrepreneurs to strive for great outcomes and to persevere despite the setbacks that life presents. On a personal note, if one has a fear of being different, take heart that our society is already highly diverse and becoming more so every year. Perhaps more than anywhere in the world, Silicon Valley is a place that gives one the opportunity to try new things and be different. I speak from experience — I am one of the first openly gay VCs in the industry. Although being gay is still uncommon in the VC world, I’ve never felt discrimination; ultimately, I have found the tech industry remarkably open-minded, welcoming and meritocratic.

How important is diversity at your own firm, and how do you encourage the companies in your portfolio to think about diversity?
I think that diversity of thought is most important. As Steve Jobs eloquently observed, it is most important to think different.

The information in this article is presented as-is.

©2018 First Republic Bank

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