I’m writing this from booth number nine—swaddled between three dark wood walls and a thick Greek key-patterned curtain—at Sam’s Grill in downtown San Francisco.
These aren’t your classic red American diner booths or shadowed confessional booths. Tucked away in a train car hall, with a handy black buzzer to summon the waiter, the booths feel secluded.
I’m here, in my booth number nine, with a ceiling view of a John James Audubon-style painting of soaring ducks, for a taste of VC history. In 1957, this restaurant was the West Coast venture capital hotspot.
Or the closest thing to. In the late 50s and 60s, venture capital was still called adventure capital and a check for $80,000 or $100,000 was a lot of money for a fledgling entrepreneur—and in Sam’s booths, IVP founder Reid Dennis convened a small group of like-minded investors to hear entrepreneurs’ pitches. It was an early version of the lunch pitch meetings I’ve heard about hundreds of times. (Dennis passed away earlier this year, but leaves a legacy: IVP recently raised its $1.6 billion eighteenth fund.)
There have been a number of VC “hotspots” over the years. The Creamery during the Web 2.0 days in the SoMa neighborhood of San Francisco, of course. And Buck’s, in Woodside, during the dotcom days.
Sam’s belongs to its own moment. In his 2022 book The Power Law, author Sebastian Mallaby writes that the booths were a key part of Sam’s appeal for those early adventure capitalists. They “permitted the illusion of privacy” in a financial district restaurant where the “sole was dependable and the sourdough was fresh,” Mallaby wrote.
IVP’s Dennis sometimes talked about the lunch clubs as a microcosm of how much VC has changed, Steve Harrick, a general partner at the firm, told me as I ripped my sourdough.
“When he’d talk about it, he would shake his head about how competitive the industry has become,” said Harrick. “He’d use these stories to say: ‘We used to collaborate on everything. There just weren’t very many of us, there wasn’t that much capital to go around, and there were only so many financeable alternative options each year. So, I showed them my deals and they showed me theirs. And the biggest thing in all of it was honesty—your word really mattered. If you said you were in, you were in.’”
In the 50s and 60s, venture capital was far from mainstream, with entrepreneurs and VCs alike donning coats and ties to convey respectability, a stark contrast to Patagonia vests and hoodies. But whether it was ties or vests, the goal was the same: to build trust.
“What’s so important in this industry is that you have to decide whether you trust somebody when you’re going into business with them,” said Harrick. “Would you rather do it like this, or would you rather use a Zoom screen?”
To Harrick’s point, I’m unsure if I buy Mallaby’s assertion that it was exclusively the privacy mirage that made the booths appealing to Dennis. I wonder instead if it was the focus. In restaurants, there’s almost always minor ruckus, but hunkered between the wood walls, you can really listen to somebody, really see them. And if it’s true that venture is ultimately a people business, listening can make all the difference. In VC, what you don’t know can hurt you. And today the stakes are higher and the checks are bigger, which makes that truer than ever.
Harrick and I spent a lot of time talking about what’s changed in VC, from the scale and competitiveness of the space to the improved flow of information to the wide-ranging teams that now support firms and founders. The magnitude of potential returns has also grown exponentially—early VC Arthur Rock’s original returns were in the tens of millions, and now (at least if you’re at that growth stage like IVP) that can be one check.
“How we do due diligence, the flow of information, the magnitude of the potential, that all has changed,” said Harrick. “But the basic element of giving capital to a money-losing business with an executive I believe in, because I think they can create something great? That’s exactly the same.”
After Harrick left, I puttered about in Sam’s, watching as the fifth-oldest restaurant in the U.S. Transitioned into evening. The wine, fries, and clam chowder started flowing. Sam’s owner, Peter Quartaroli, was around tending bar, and I corralled him into my booth number nine. I asked him if he knew that OG VCs used to come here. Quartaroli laughed: “They still do!”
Quartaroli saved Sam’s from demolition about a decade ago. An IMDb-real actor in his other life, Quartaroli showed me how to ring the bells in the booths, and enthusiastically brought me to a chair monogrammed for former San Francisco mayor Willie Brown. (At 90, Brown remains a Sam’s regular.) I don’t think restaurants and VC have much in common, but if I take both Harrick and Quartaroli at their word, there is perhaps one thing—that both can only exist as they are with human connection, flawed but luminous.
At one point, Harrick asked me what I thought this story was about, and lacking a good answer, I half-launched into a tight ten about Petrale sole. But he met my snark with disarming earnestness.
“Well, it is about soul, a little bit,” Harrick said.
I later asked Quartaroli if he thinks restaurants like Sam’s—which opened in 1867, less than 20 years after California became a state—have their own souls. Quartaroli flashed his IMDb smile: “Definitely.”
And if someday there’s a technologist who makes those booth wood walls talk, I’d love to listen.
On hotspots… My editor tells me that VC hotspots evolve by era. Shoot me an email: What’s today’s VC lunch hotspot?
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: [email protected]
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Nina Ajemian curated the deals section of today’s newsletter.
VENTURE DEALS
- Forterra, a Clarksburg, Md.-based self-driving technology company, raised $75 million in Series B funding. Moore Strategic Ventures, XYZ Venture Capital, and Hedosophia Venture Capital led the round and were joined by Standard Investments and existing investors Crescent Cove Advisors, Enlightenment Capital, and Four More Capital.
- Viome, a Bellevue, Wash.-based preventative personalized healthcare company, raised $25 million in Series D funding from Khosla Ventures, Bold Capital WRG Ventures, Marc Benioff, and others.
- Darkhive, a San Antonio, Texas-based defense tech developer of a situational awareness system, raised $21 million in Series A funding. Ten Eleven Ventures led the round and was joined by Crosslink Capital, RTX Ventures, and Stellar Ventures.
- aifleet, an Austin, Texas-based tech-driven trucking company, raised $16.6 million in Series B funding. Tom Williams led the round and was joined by Volvo Group Venture Capital, Obvious Ventures, Ibex Investors, and others.
- CardiaTec, a Cambridge, England-based cardiovascular-focused techbio company, raised $6.5 million in seed funding. Montage Ventures led the round and was joined by Continuum Health Ventures, Dr. Maximilien Levesque, Naheed Kurji, and existing investors Laidlaw Ventures and APEX Ventures.
- Lil Bucks, a San Diego, Calif.-based buckwheat brand, raised $3 million in Series A funding from Proterra Investment Partners.
- Ammalgam, a Singapore-based decentralized lending exchange, raised $2.5 million in seed funding. Lightspeed Faction and Framework Ventures led the round and were joined by Robot Ventures, Bodhi Ventures, NGC Ventures, angel investors, and others.
- Optimotive, a Windsor, Canada-based AI-driven robotics developer for outdoor construction automation, raised $2 million in seed funding. Version One Ventures led the round and was joined by Garage Capital and Newlab.
PRIVATE EQUITY
- GTreasury, backed by Hg and Mainsail Partners, acquired CashAnalytics, a Dublin, Ireland-based cash forecasting and analytics solution. Financial terms were not disclosed.
- Recognize acquired a majority stake in Blue Mantis, a Portsmouth, N.H.-based IT services provider. Financial terms were not disclosed.
- RoadSafe Traffic Systems, backed by Investcorp and Trilantic North America, acquired All Star Striping, a Ogden, Utah-based pavement marking company. Financial terms were not disclosed.
- SEVA acquired a minority stake in Chicory, a New York City-based end-to-end contextual commerce media platform. Financial terms were not disclosed.
EXITS
- OceanSound Partners acquired PAR Excellence Systems, a Cincinnati, Ohio-based automated supply chain management solutions provider for government, non-profit, and private healthcare systems, from Northlane Capital Partners. Financial terms were not disclosed.
- THL Partners agreed to acquire AMI, a Duluth, Ga.-based silicon level software provider for technology companies, from HGGC. Financial terms were not disclosed.
OTHER
- Progress agreed to acquire ShareFile, the Raleigh, N.C.-based workflow tools unit of Cloud Software Group, for $875 million.
IPOS
- MBX Biosciences, a Carmel, Ind.-based peptide therapeutics biotech company, plans to raise $136 million in an offering of 8.5 million shares priced between $14 to $16. Frazier Life Sciences, New Enterprise Associates, OrbiMed Advisors, Deep Track Capital, Wellington Management Company, Norwest Venture Partners, and RA Capital back the company.
FUNDS + FUNDS OF FUNDS
- Castik Capital, a Luxembourg-based private equity firm, raised €2 billion ($2.2 million) for its third fund focused on European companies.
- Five Point Energy, a Houston, Texas-based private equity firm, raised $1.4 billion for its fourth fund focused on sustainable infrastructure.
PEOPLE
- Amulet Capital Partners, a Greenwich, Conn.-based private equity firm, hired Michael Keaveney as a partner and head of investor relations. Previously, he was at Capstone Partners.
- FalconPoint Partners, a New York City-based private equity firm, appointed Adam Gross as partner, head of business development and capital markets. Previously, he was at Intermediate Capital Group.
