June 20, 2008
From Sand Hill To San Francisco: The Reverse VC Commute Continues
“Menlo Park-based Sequoia Capital, one of Silicon Valley's most successful venture capital firms, has agreed to lease the top floor of the office tower Tishman Speyer is building at 555 Mission St.….If completed, the deal would be the third major tenant Tishman has landed at 555 Mission St. at a time when the city's commercial real estate market has cooled considerably.”
“Sequoia would be the latest in a growing list of Sand Hill Road venture capital firms establishing presences in San Francisco or moving here altogether. In 2007, investor Sandy Robertson moved his $5 billion private equity group Francisco Partners to the Letterman Digital Arts Center in the Presidio. At 1650 Owens St. in Mission Bay, developer Alexandria Real Estate Equities has signed deals with four VCs, including Versant Ventures, Novo Ventures and Arch Venture Partners.”
UPDATE: From a plugged-in reader: "Sequoia's office in SF may validate the recent rumor of their extension into starting a "hedge fund like entity" in the group."
∙ Tishman Speyer tags Sequoia Capital for 555 Mission [Business Times]
∙ A Virtual Tour Of 555 Mission Street (And Downtown San Francisco) [SocketSite]
First Published: June 20, 2008 10:15 AM
Comments from "Plugged In" Readers
I never understood why a VC would *not* have offices in SF. You are closer to SF, South SF (biotech), and the mini-San Mateo hub of Emeryville/Berkeley (biotech/pharma/.com) and (gasp) parts of Oakland.
Any VC's want to weigh in?
Posted by: dub dub at June 20, 2008 10:39 AM
The center of innovation in the Bay Area has historically been south of 92.
Posted by: Henry at June 20, 2008 11:09 AM
in my opinion, places like this move to SF because the head partner lives in SF or close to SF.
sort of like when the CEO moves, the company moves too.
Posted by: sky at June 20, 2008 11:19 AM
"Sequoia has been an investor in various tech superstars, including Apple, Yahoo, Cisco Systems, Oracle and Google."
All the big VC wins have been to the south. Web 1.0 in SF never reached critcal mass or paid out from a VC perspective. Web 2.0 and bio/cleantech have legs.
Posted by: Michael at June 20, 2008 11:40 AM
Last time I was down by Sand Hill Road there was some pretty major expansion going on of the office complexes off 280. I wonder if there are currently space constraints that might push VC's to look elsewhere?
Posted by: zzzzzzz at June 20, 2008 11:42 AM
Entrepreneurs go with hat in hand to Sand Hill Road. VCs don't knock on doors of startups. There's little incentive to move the office unless some partners live in Marin...
As to the article's assertion that this is a growing trend, I find that dubious. Lots of private equity is in the city already, so Sandy Robertson hardly counts as a VC. The other three mentioned? They are all biotech funds.
Posted by: "Dave" at June 20, 2008 11:44 AM
zzzzzzz -- I think some of that construction at 280 and Sand Hill may be for the new hotel/spa complex. Not completely sure though -- since the buildings look awfully similar to the office complex nearby.
Posted by: bats at June 20, 2008 12:15 PM
"I wonder if there are currently space constraints that might push VC's to look elsewhere?"
Yes, that area just east of the Sand Hill/280 interchange is fairly built out. There's a lot of open space around there that gives the impression of plenty of room. But most of that open space is owned by Stanford. The university has shown no signs of selling out. Stanford is sitting on a gold mine of real estate. They own some 8000 acres of prime land, most of it undeveloped.
Posted by: The Milkshake of Despair at June 20, 2008 12:27 PM
They are tired of paying $5/gal of gas. Also, no BART in SV.
Posted by: Reazons at June 20, 2008 12:32 PM
There are always two sides to VC capital. Those who take from VCs and those who give to VCs. It might make sense for a VC to have an office in SF if it can raise more funds. A top floor office in SF looks to me like they are trying to impress donors rather than startups.
Posted by: SJ at June 20, 2008 12:40 PM
A few VCs have a small office in San Francisco for meetings and the like (someone mentioned fundraising). I make the commute from SF to Sand Hill everyday but sometimes I can take Cal Train in if I don't need my car for meetings that day (like today). Sequoia's office in SF may validate the recent rumor of their extension into starting a "hedge fund like entity" in the group.
Posted by: VC on Sand Hill at June 20, 2008 12:54 PM
You don't know what you are talking about in this case. Sequoia does not have to market their new funds beyond saying "we have a new one" to their existing investors. Having a top floor office is certainly not for the purposes of impressing investors.
You can't even invest in their funds anymore unless you work there or have an existing investment.
Posted by: Jordan at June 20, 2008 12:59 PM
Wait, all the Socketsite regulars keep telling us that San Francisco is falling into a spiral of despair and will soon be overrun with homeless bums defecating into every building entryway: Muni is broken, The City is falling apart, and the streets are filled with trash.
Why are these extremely wealthy and powerful people wanting to move into that?
Posted by: NoeValleyJim at June 20, 2008 1:03 PM
I agree with the comments that sometimes this has way more to do with certain owners / CEO's moving / living in the north bay vs. anything else.
But I do think it's possible they want to have at least a leg in to the SF core. You've got Yahoo and Google and others all having fairly good sized offices now there. StubHub (ebay purchased) was centered there and sold nicely, as an example...
Interesting that the article indicated that they purchased there because the bldg is 'green'...which goes with how they're starting to invest in more green-tech ventures.
Posted by: Dan at June 20, 2008 1:07 PM
Brand new (which probably meant big tenant improvements, i.e. customizing for the tenant, paid for by the owner), top floor of a LEED building in a great location for 80 bucks psf?
Is the market in SF really that bad? I would have expected 100+.
Boy am I out of touch. Last time I looked for office space in SF was a year ago and the market was so hot, I could barely get the brokers to return my calls. Now they are offering these kinds of rents on top tier space like that? I wish I hadn't renewed last year!
Posted by: tipster at June 20, 2008 1:54 PM
With more and more VCs investing in biotech, it makes since that they would want a more central location given the location of the "hubs" of bio in the Bay Area. This will make it easier on them when they drop in on the companies they have invested in.
I'm sure each firm has it's own reasons, but this is atleast one of them (and the reason my firm (not VC) expanded into the SF space).
Posted by: Craig at June 20, 2008 3:07 PM
Sand Hill is notoriously short of space. They are ejecting forked assets.
Posted by: Mole Man at June 20, 2008 5:18 PM
What I don't understand is how such a huge critical mass of VC ended up on Sand Hill to begin with. Anyone have any history on that? I was reading through the addresses of VC firms published in a recent issue of SF Business Times and was really surprised at how many live on the same street!
Are there more synergies that go with this level of proximity than might meet the eye? And if so, are we beginning to see a shift of a critical mass of VC to the north?
Posted by: AnonN at June 20, 2008 5:40 PM
It has a lot to do with it being right next to Stanford. Not only is Stanford full of smart, ambitious people, the school was also a leader in helping its students turn their ideas into start ups, and tons of SV success stories have come out of that university (Sun/Yahoo/Google/etc.).
Posted by: g at June 20, 2008 10:13 PM
The complex being built at 280 and Sand Hill Road will be composed of a hotel and office complex. The hotel will be a 170,000 sf ulra-luxury hotel that will be operated by Rosewood and will include a restaurant and spa. The offices will be 4 buildings totaling 100,000 sf and is currently about 75% leased at double-digit rents (NNN psf monthly). It is notoriously difficult to develop on Sand Hill Road and this construction will likely be last of its kind for the next few decades, if not longer.
The hotel is scheduled to open April 2009 and the offices will be done a little before then.
Posted by: sand hill insider at June 23, 2008 11:23 AM
Sequoia hired Eric Upin to manage their $750M hedge fund.
Recruiters have also been searching for a team to fill out Eric's team.
As for all the speculation on why Sequoia is taking up office space in SF, I think the partner-living-in-Ross explanation is the best. Though, many of the partners live in the Woodside/Atherton area.
Lastly, I can say that many firms, my firm included ($5bn+ PE firm), have been looking for larger office space for some time now, SF included.
Posted by: vc guy at June 27, 2008 5:55 PM