I’ve been covering General Catalyst Partners for three years now, and Charlie Baker’s name very rarely comes up. Baker, a Republican gubernatorial hopeful in Massachusetts, has seemed mostly focused on political ambitions and has been far from a prolific investor for the Cambridge-based venture capital firm (three investments in three years).
So I’ve been surprised to see PandoDaily’s series of posts contending that Baker is a high-ranking executive with General Catalyst whose $10,000 campaign contribution to a fellow Republican, New Jersey Gov. Chris Christie, supposedly helped General Catalyst to get a $25 million commitment from New Jersey’s public pension fund.
From what I know about General Catalyst, this just seems like a coincidence.
I won’t wade into whether any of this does actually constitute a “pay-to-play” violation or not. Instead I just want to offer a bit of context based on what I know about General Catalyst (which helps form the basis for my lack of outrage about PandoDaily’s stories). Make of it what you will.
1. General Catalyst is a pretty successful VC firm. You know Kayak? General Catalyst incubated the company and reaped more than $400 million from Priceline’s acquisition of Kayak. Other firm investments have included big acquisitions (Rue La La), IPOs (Brightcove and Demandware), and IPO contenders (Airbnb and HubSpot). At a time when many VC firms have been struggling to get investors, General Catalyst has raised $1.3 billion for two funds over the past two years. That is, General Catalyst doesn’t strike me as a venture capital firm that has to pull shenanigans to get limited partners to invest. I also took a look at how General Catalyst has performed for other state pension funds. California, which discloses the performance of its public employees retirement fund investments, backed an early General Catalyst fund and saw that fund rank No. 17 out of 160 investments on the rate of capital returned. It’s not a stretch to think New Jersey might’ve been influenced by results like that in choosing to put money into General Catalyst.
2. General Catalyst “partners” don’t call the shots. Sorry, they just don’t. Dennis Keohane has offered the full details on this point, but it’s worth mentioning again. The PandoDaily stories say over and over that Charlie Baker is a partner at General Catalyst, which is technically true. But General Catalyst doesn’t use “partner” the way many other VC firms do. At General Catalyst, the highest ranking executives are “managing directors,” who are the ones that go out and raise funding from investors such as pension funds. General Catalyst contends Baker and other “partners” are involved with investing but not with fundraising. PandoDaily is obviously questioning that, but think about it: Charlie Baker wants to become the next governor of Massachusetts, and it is probably his last chance, because he’s already tried once and lost. Does it really make sense that he has been choosing to be intimately involved with the day-to-day fundraising activities of a venture capital firm that is doing well on its own?
3. General Catalyst is not among the prominent venture capital firms that have invested in PandoDaily. I don’t think it would be a bad thing for PandoDaily to disclose at the end of stories like this that its investors include the likes of Accel Partners, Menlo Ventures, and Greylock Partners. Those VC firms are competitors of General Catalyst, particularly since General Catalyst has sought to become more active in Silicon Valley in recent years. By no means am I saying that this has influenced PandoDaily’s coverage of the Baker affair. But it is probably worth disclosing.