- June 10, 2021
- Posted by: Stratford Team
- Category: Markets
- Pegasus Tech Ventures is acquiring Garage Technology Ventures, a firm with a dot-com era pedigree. Such acquisitions are rare.
- Pegasus is backed by many Asian corporations such as Asus and has invested in Coinbase and DoorDash.
- Pegasus CEO Anis Uzzaman told Insider this deal will boost its Silicon Valley deal-sourcing prowess.
- See more stories on Insider’s business page.
For the past 10 years, Pegasus Tech Ventures has connected Asian corporations with a roster of high-flying startups such as Coinbase, DoorDash, and Bird. Now the venture firm with $1.5 billion in assets is seeking to spread its wings in Silicon Valley further, by buying a firm with internet-pioneer cred.
Pegasus Tech Ventures, founded by Anis Uzzaman, announced on Wednesday that it has acquired Garage Technology Ventures for an undisclosed sum. It’s extremely rare for one VC firm to buy another. The more common exit for a firm is to disband.
As part of the deal, Garage cofounder Bill Reichert will be joining Pegasus as a general partner.
Reichert, who has been an investor in Silicon Valley for decades, has worked closely with Pegasus since the firm’s founding in 2011, Uzzaman told Insider.
“During that process, he played a major, critical role in making us successful,” Uzzaman, Pegasus’ CEO, said. “We wanted to have 100% of him on the team.”
Pegasus has a distinct business model. It’s primarily backed by companies such as Asus and Sega. Unlike most VC funds, which pool investments from different backers, each company has its own fund, and Pegasus tailors an investment strategy specific to each one. The corporate backers get exposure to innovations from cutting-edge startups, many of which have struck lucrative licensing and distribution agreements with those larger companies, Uzzaman said.
Reichert launched Garage in 1998, and the firm backed companies such as Pandora and SimplyHired in its early days. Garage was also an early organizer of conferences for aspiring startup founders.
Uzzaman met Reichert as he was launching Pegasus, and Reichert, struck by the firm’s distinct business model, supported Pegasus early on with advice and connections. That collaboration, along with Pegasus’s close ties to large corporations, has proven useful for the firm to gain access to competitive rounds, the two said.
“I can’t think of a case when we’ve been squeezed out of a deal,” Reichert said.
The merger of the two firms formalizes their existing partnership. Pegasus has also worked closely with Garage for years on its own event series, the Startup World Cup, which hosts a series of global startup competitions. (This year, they’re on track to host 60 events, Uzzaman said.) Reichert has served as the Startup World Cup’s chief evangelist since the event’s launch in 2017.
Reichert will now also focus on deal sourcing and due diligence for Pegasus. The extra support is critical, Uzzaman said, given the intense stream of VC activity. Pegasus now manages 29 funds on behalf of its corporate backers, and it’s seeking to build further connections with large companies by effectively managing a large chunk of their business development.
“The pipeline looks to be stronger than ever,” Uzzaman said. “Just getting out of the pandemic, corporations are really, really pushing hard on innovation.”