By MICHAEL J. DE LA MERCED, New York Times
With billions of dollars chasing Silicon Valley’s newest darlings, venture capital firms are becoming hard pressed to declare what sets them apart.
Among the most prominent examples of Formation 8’s work is Oculus VR, the virtual reality start-up that Facebook bought for about $2 billion.Credit Lucy Nicholson/Reuters
But in raising its new fund, a relative newcomer has staked out what it believes is a niche: connecting American start-ups with the technology giants of Asia.
Formation 8, an investment firm founded three years ago, plans to disclose publicly on Wednesday that it has closed its second fund at about $500 million. And in raising that pool of capital, the firm’s partners have emphasized that they can connect companies in the United States with potentially important counterparts in Asia.
The emphasis on the Asian partnership angle — aided in large part by Brian Koo, a co-founder and a member of the family that runs an offshoot of the Korean electronics giant LG — is a perhaps necessary move given the proliferation of money sloshing around the venture capital world. American start-ups alone raised more than $3 billion in November, according to Crunchbase, and entrepreneurs regularly speak of fighting off would-be backers eager to buy into their company.
“Nowadays, an entrepreneur has the ability to sit with 10 to 12 venture capitalists and ask, ‘How are you going to help me build my business?’” Jim Kim, a Formation 8 co-founder, said. “We want to be recognized as the venture firm that can do this kind of international expansion.”
(Another cofounder of the firm is Joe Lonsdale, a founder of the data analysis firm Palantir, while advisers include the veteran investor Pierre Lamond and Gideon Yu, a co-owner of the San Francisco 49ers.)
Mr. Kim and Mr. Koo point to the work that their firm has done in building out its footprint in Asia. Formation 8 has business development offices in Seoul, Shanghai, Beijing and Singapore, all dedicated to helping portfolio companies form partnerships with the likes of Samsung and LG.
“Relationships are everything over there,” Mr. Koo said. “You need the right partners and the right team.”
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