Joseph “Joe” Montana, co-founder of iMFL and retired quarterback for the National Football League (NFL), speaks during an interview in San Francisco, Calif., On Tuesday April 30, 2013.
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Joe Montana won his first Super Bowl as an NFL quarterback in 1982. Almost four decades later, he is about to go public as a venture capitalist for the first time.
Montana, who led the San Francisco 49ers to four Super Bowl wins and was inducted into the National Football League Hall of Fame in 2000, has invested in startups for the past six years through his company Liquid 2 Ventures. He started with a $ 28 million fund and is now closing his third fund, which is almost three times the size.
One of Liquid 2’s first investments was announced in July 2015 when a code repository called GitLab raised a $ 1.5 million seed round after going through the Y Combinator incubator program. GitLab’s valuation at the time was around $ 12 million, and other participants in the funding included Khosla Ventures and Ashton Kutcher.
On Thursday, GitLab will debut on the Nasdaq with a market cap of nearly $ 10 billion based on a share price of $ 69, the high end of its range. Montana’s initial investment of $ 100,000, along with some follow-up funding, is worth approximately $ 42 million at that price.
“We’re all pretty pumped up,” said Montana, 65, in an interview this week while on vacation in Italy. “This is going to be a monster for us.”
Joe Montana # 16 of the San Francisco 49ers celebrates after scoring a goal against the Cincinnati Bengals in Super Bowl XVI on January 24, 1982 at the Silverdome in Pontiac, Michigan. The Niners won the Super Bowl 26-21.
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While famous athletes trying their hand at startups have become a trend in Silicon Valley – from NBA stars Stephen Curry and Andre Iguodala to tennis legend Serena Williams – Montana got into the game much earlier. Before Liquid 2, Montana was involved in a company called HRJ, founded by former 49ers stars Harris Barton and Ronnie Lott.
HRJ, which invested in other funds rather than companies directly, collapsed in 2009 and was sued for alleged failure to meet its financial obligations.
But instead of returning to the sport that made him famous in a leadership role or as a broadcaster like so many other all-star quarterbacks, Montana stuck with investing. This time he went a completely different way.
Convinced of Ron Conway
Ron Conway, the Silicon Valley super angel known for making lucrative bets on Google, Facebook, and Airbnb, began showing Montana in the world of early-stage investing primarily through Y Combinator. Montana, along with a growing number of seed investors and celebrities, attended the Y Combinator Demo Days, where entrepreneurs show slides of their companies that are always growing right.
“We were trying to see what their secret sauce is and who they are looking at and what they are really looking for in early stage companies,” Montana said of Conway and his team. “He started taking us there and we made a handful of investments here and there and then he talked me into starting a fund.”
In 2015, Conway spoke to the newest founding group of the Y Combinator program and invited Montana to attend the event. There, Montana met GitLab CEO Sid Sijbrandij, a Dutch entrepreneur who had turned an open source project to help developers collaborate on code into a company that packaged the software and sold it to companies.
“We got together and said, ‘Hey, this is a special guy,'” said Montana. “We committed this night.”
GitLab just came out of Y Combinator. In his presentation on Demo Day in March, Sijbrandij told the audience that his company had 10 employees and 800 contributors were working on the open source project. GitLab is on track for $ 1 million in annual revenue, he said, and paying customers include Apple, Cisco, Disney, and Microsoft.
GitLab CEO Sid Sijbrandij at a company event in London
According to the prospectus, GitLab now employs over 1,350 people in more than 65 countries. As GitLab prepares to hit the public market on Thursday, GitLab’s annualized revenue is over $ 230 million. Revenue rose 69% to $ 58.1 million in the second quarter
However, with GitLab spending three-quarters of its revenue on sales and marketing, the company posted a net loss of $ 40.2 million in the most recent quarter. Much of the marketing budget is focused on expanding the DevOps user base (the combination of software development and IT operations).
“To drive new customer growth, we intend to continue investing in sales and marketing, with a focus on replacing DIY DevOps in larger organizations,” the prospectus reads.
“Still hearing pitches”
For Montana, GitLab is his company’s first IPO, despite saying, “We have 12 or 13 other unicorns in our portfolio,” based on startups valued at $ 1 billion or more. These include Anduril, the defense technology company led by Oculus co-founder Palmer Luckey, and the autonomous vehicle testing startup Applied Intuition.
Montana has three other partners in the company: Mike Miller, who co-founded Cloudant and sold it to IBM; Michael Ma, who sold a start-up to Google and became product manager there; and Nate Montana, Joe’s son who previously worked on Twitter.
Montana said he is involved in the fund on a daily basis and attends partner meetings every Tuesday. He said his partners, who are more experienced in the technology, do much of the technical due diligence and business sourcing while he focuses on supporting portfolios with connections on his network.
“I was still speaking across the country before the pandemic,” Montana said, adding that he wasn’t accepting a salary until the third fund. “I’ve spoken to companies like SAP, Amex, Visa, and a lot of big companies, from big insurance companies to Burger King.”
Specifically for GitLab, Montana said he put Sijbrandij in touch with a senior executive at Visa early on when the company was looking to strike a deal with the payment processor.
“I still hear pitches, I go to pitches and do all of that,” said Montana. “But my time is better spent connecting these companies as they mature.”
SEE: GitLab co-founder and CEO on the future of work during and after the pandemic