Angel investor makes a Mint

September 29, 2009

From right to left: Dave McClure with Rob Hayes and Mark Goines at TechCrunch50, courtesy of Dave McClure

At 5-foot-8, Dave McClure calls himself “one of the smallest” venture capitalists in Silicon Valley, either “by height or by wallet size”.  But he was walking tall after Intuit announced it was buying Mint.com recently for $170 million.

That means McClure, who invested $25,000 in Mint two years ago as part of a Series A funding round, is in line for a healthy payout. At the time McClure was actually on Mint’s payroll as a consultant, but was so impressed with the startup’s founder, Aaron Patzer, that he took the money they were paying him and “turned it right back around and wrote them a check.”

Mint is the first big win for McClure out of the many companies he’s invested in since cashing out from his part in PayPal’s $1.5 billion sale to eBay. “I’ve been doing angel investing for almost five years now and this is the first full exit I’ve had,” said McClure, who first found out about the deal in a 4 a.m. email from Patzer.

A few hours later McClure was hi-fiving fellow investors Rob Hayes (First Round Capital), Mark Goines and Jeff Clavier (SoftTech VC) at the TechCrunch50 conference in San Francisco, where McClure said they were all walking around “with big-ass smiles on our faces.”

Prior to its exit, Mint had raised a combined $30 million – half of that coming in a Series C round led by Benchmark Capital that just closed in August. Some have questioned whether Mint’s $170 million sale was high enough given the amount of VC capital it raised, but McClure disagreed.

“From the angel and A round point of view it was a great outcome,” insisted McClure. “For the B round investors, I’m not sure how big a win Benchmark was expecting, but just looking at it from an IRR (internal rate of return) basis it’s still a pretty good story for them. For the C round investors, I don’t know anyone that makes that good a return in 30 days or less.”

Blogger Jason Fried, of 37Signals.com, didn’t take umbrage with the sale price, but in a post said it was an example of the “VC-induced cancer that’s infecting our industry and killing off the next generation” and that Mint’s exit was likely forced by investors. Union Square Ventures’ principal partner Fred Wilson countered Fried’s assertion in his own blog titled “Who Decides When To Exit?”

PE Hub editor Dan Primack agreed with Wilson in an interview for Reuters.

McClure said he likely won’t see any money from the sale for another month or so and has no plans to quit his day job as the manager of venture firm Founders Fund’s (with old PayPal boss Peter Thiel, also a Mint investor) FF Angel seed-investing program (under $1 million) and Facebook’s startup incubator program fbFund REV.

McClure said this year’s fbFund winners were more productivity-focused Web-based companies, like Mint, that incorporate social aspects. One of them is Life360.com, a service that helps consumers keep closer tabs on family members, find lost phones or keys and protects them from identity theft.

“They’re less typically Facebook-platform apps (i.e. poker) as opposed to just normal travel or exercise websites and services,” said McClure, who seems to be on the lookout for the next Mint from among the 400 or so applicants fbFund received this year. “There’s a whole set of different things that I think people never thought about managing online before that they’ll probably start to be able to have a set of tools to do that with now.”

No doubt McClure and the rest of Mint’s investors will be keeping close tabs on what Patzer decides to do next, after the Intuit sale is finalized. “I’m sure he’d have no problem raising capital if he decides to do that,” said McClure. “This has been a great win for him and for several of us (investors).”

6 comments

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Whoopee – a $25k investor is NOT an angel. Thats a seed investor. And not one other investment of his has paid back. His relationship was consultant. None of this makes the guy an angel. These guys are worse than Hollywood for baseless self promotion – theres no news here.

Posted by moneyman | Report as abusive

Interesting isn’t it, the divide between those who want to make a quick buck selling short and those rare few who work doggedly to uncover real entrepreneurial value in the iron slag heaps of the US economy. The re-birth of US dominance does not lie with quick gain hit-and-run investors but rather with those who are able to recognize, commit to, support, foster and invest in cutting edge technologies that can penetrate the world market. If ‘small is beautiful’, then either 5.8 foot super-investor or cutting edge nano technologies are all part of the bigger picture necessary to keep the US as the entrepreneurial giant of the 21st Century. Many economies can copy, perhaps more cheaply, and they do, but they are behind the curve when it comes to creativity and shaping the future.

“moneyman”‘s comment is interesting, but inaccurate. $25,000 happens to be just about right on the nose as the average angel investment in the US, and Dave McClure is absolutely a serious investor (both on his own as an angel, and through the funds with which he works.) Over 50,000 companies received angel investments last year, with the average total funding in an angel round being between $250,000 and $500,000. The angels and early stage funds that invested in Aaron Patzer and Mint did very well for themselves and the Mint team, and helped to create a breakthrough product that millions of people find extraordinarily useful. And the problem with that is…?

Great news to hear that a angel investor who invested 25k
can make it big. Usually, it takes big money to make bigger money. This gentlemen proves the theory that not all investments have to be large, to make millions. Congratulations.

Crazy. An Angel investor is anyone who invests. In fact, we need more of them! see this article, http://www.eavg.com/learning.php?7

Posted by eA | Report as abusive

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So… how much did this guy make?

Posted by psostre | Report as abusive