Joe Montana prepares for biggest windfall as a venture capitalist ahead of GitLab’s $10 billion IPO

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  • After exiting the software company’s Y Combinator accelerator program, Joe Montana’s Liquid2 Ventures invested in GitLab at a valuation of about $12 million.
  • GitLab is set to hit the Nasdaq on Thursday at a valuation that could top $10 billion, which would be a nearly 420-fold return on investment from Montana.
  • “We are all very excited,” Montana said in an interview this week, while vacationing in Italy.

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Joe Montana won his first super bowl As an NFL quarterback in 1982. Nearly four decades later, he is about to get his first IPO as a venture capitalist.

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Montana, who led the San Francisco 49ers to four Super Bowl victories and was drafted into the National Football League hall of fame In 2000, has invested in start-ups through his firm in the last six years, Liquid 2 Ventures. He started with a $28 million fund, and is now closing his third fund which is almost three times as big.

One of Liquid2’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 was valued at around $12 million at the time, and other participants in the financing included Khosla Ventures and Ashton Kutcher.

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On Thursday, GitLab is set to debut on the Nasdaq with a market cap of about $10 billion, based on a $69 share price, which is the high end of its range. Montana’s initial $100,000 investment, with some follow-on funding, is worth about $42 million at that price.

“We’re all very excited,” Montana, 65, said in an interview this week while vacationing in Italy. “It’s going to be a monster for us.”

While famous athletes dabbling in start-ups have become a trend in Silicon Valley – from NBA stars Stephen Curry and Andre Iguodala to tennis legends Serena Williams – Montana jumped into the game long ago. Prior to Liquid 2, Montana was associated with a firm called HRJ, which was founded by ex-49ers stars Harris Barton and Ronnie Lott.

HRJ, which invested in other funds instead of investing directly in companies, collapsed in 2009 and was prosecuted for allegedly failing to meet its financial commitments.

But instead of returning to the sport that brought him fame in an executive role or as a broadcaster, like many fellow All-Star quarterbacks, Montana stuck with the investment. This time he took a very different route.

Convinced by Ron Conway

Silicon Valley super angel Ron Conway, known for making lucrative bets on Google, Facebook and Airbnb, began to expose Montana to the world of early-stage investing, primarily through Y Combinator. Montana, with a growing crop of seed investors and celebrities, will be participating in Y Combinator Demo Days, where entrepreneurs show slides with their companies’ growth that is always up and to the right.

“We were trying to see what their secret sauce was and who they saw and what they were really looking for in early-stage companies,” Montana said, referring to Conway and his team. “They started taking us out there, and we started investing somewhat here and there, and then they talked me into starting a fund.”

In 2015, Conway was speaking to the latest group of founders at the Y Combinator event, and he invited Montana to attend the event. It was here that Montana met GitLab CEO Sid Sijbrandij, a Dutch entrepreneur who had created an open-source project to help developers collaborate on code at a company that was packaging software and Selling it to businesses.

“We got together, and said, ‘Hey this is a special guy,'” Montana said. “We committed that night.”

GitLab just came out of Y Combinator. in that Presentation At Demo Day that March, Sijbrandies told the audience that his company had 10 employees with 800 contributors working on open-source projects. He said GitLab was on pace with annual sales of $1 million, and paying customers included Apple, Cisco, Disney and Microsoft.

According to this, GitLab now employs over 1,350 people in over 65 countries catalog. GitLab reported annual revenue of over $230 million as it prepares to hit the public market on Thursday. Second quarter sales up 69% to $58.1 million

However, because GitLab spends the equivalent of three-quarters of its revenue on sales and marketing, the company reported a net loss of $40.2 million in the latest quarter. Most of the marketing budget is focused on expanding its DevOps (combination of software development and IT operations) user base.

“To drive new customer growth, we intend to continue investing in sales and marketing with a focus on transforming DIY DevOps within large organizations,” the company said in the prospectus.

‘Still listening to pitches’

For Montana, GitLab marked his firm’s first IPO, though he said “we have 12 or 13 more unicorns in our portfolio,” referring to start-ups valued at $1 billion or more. These include defense technology company Enduril and autonomous vehicle testing start-up led by Oculus co-founder Palmer Luckey. applied intuition.

Montana has three other partners in the firm: 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 at Twitter.

Montana said he is involved in the fund on a day-to-day basis and attends partner meetings every Tuesday. He said his associates, who are more experienced in technology, handle much of the technical due diligence and sourcing of deals, while he focuses on helping the portfolio with connections across its network.

“Up until the pandemic, I was still speaking across the country,” Montana said, adding that he didn’t start taking salaries until the third fund. “I was talking to companies like SAP, Amex, Visa and a lot of big corporations, from Burger King to big insurance companies.”

Exclusive to GitLab, Montana said that while the company was looking to strike a deal with the payment processor, it quickly paired Sizbrandies with a senior executive at Visa.

“I’m still listening to pitches, I go to pitches and do all that,” Montana said. “But my time is better now to help connect these companies as they mature.”

Watch: GitLab co-founder and CEO on the future of work during and after the pandemic

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