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Ruckus hits cozy Silicon Valley VC world -- Fenton bolts Accel, joins Benchmark


Peter Fenton
Peter Fenton, a partner at Accel Partners has defected and is joining another big-name Silicon Valley venture capital firm, Benchmark Capital.

We're hearing the matter is so sensitive the Benchmark folks aren't taking calls about it. Benchmark has put out a release (download here), which hits the wires tomorrow. We put in a call to Accel's leading partner, Jim Breyer, but he was in a meeting offsite, so we couldn't run it by him.

Fenton, 33, led and managed Accel's investments in more than ten companies, including the successful acquisitions of JBoss and Wily Technology. "He is a superstar," said Kevin Harvey, general partner at Benchmark Capital, in a statement. It is not yet clear what will happen with Fenton's board seats.

These sorts of defections of partners at top-tier firms are unusual, in part because they are usually intimately tied in deep relationships within their respective firms. Internecine struggles are frowned upon by the large institutional investors, who entrust their money to the venture capital firms; they cherish stability.

At most firms, partners vote together when to invest in a company, and a partner who takes a company board is responsible for overseeing the firm's investment at that company. If he leaves, he creates all kinds of complications, not only about what to do with the firm's board seats at companies it has backed, but also about how to dissolve the partner's percentage ownership within the firm. Lawyers get involved, and it can be acrimonious. You will see associates and lower level folks move all the time, but not partners.

The departure is fresh, because Fenton is still listed on Accel's site, as of this posting at least. (Update: As of Thursday morning, we see Fenton's bio has gone)

This comes two years after another Accel partner, Jim Goetz left the firm to join another top-notch Silicon Valley firm, Sequoia Capital.

Granted, this doesn't necessarily mean there is anything wrong at Accel. Sequoia and Benchmark are known as the most aggressive firms in Silicon Valley, so this may be more a question of poaching than any serious dissatisfaction with the Breyer's compensation structure -- but truth is, we don't know.

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It looks bery much like Jim Breyer is making Accel an increasingly unpleasant place to work - he already dominates the economics there. It is only a matter of time before other rising stars like Ranzetta choose to leave. If she does, then there is a problem of succession that LPs will be well advised to worry about.

Wibble on April 20, 2006 12:25 AM
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Wibble, thanks for the comment. I heard this said about Jim Breyer about three years ago, and I asked him about it. He responded that the firm continued to make changes, and around that time it promoted Peter Wagner to partner. And most venture firms tend to have a dominant partner or two (the ones who gain standing after backing the best portfolio companies, or of course, bring the most money to the table while setting up the fund initially), where they are paid astronomically and get a bigger cut of the profits. But the others aren't exactly paupers either. If what you say is true, why didn't things unravel quicker than they have? Why has Ranzetta hung out as long as she has? I'm not trying to be an apologist here, just trying to be fair.

Matt Marshall on April 20, 2006 7:15 AM
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It is very difficult for partners to make a leap like that, you're right. They are very tied into the economics of the funds and their vesting schedules. I think that's why it has taken so long for Goetz and now Fenton to go. But look at where they have gone - especially Fenton to Benchmark where they have a clear and explicit equal partnership, and there is no top dog. Admittedly Sequoia (where Goetz went) is not completely egalitarian, but it is at least clearly more meritocratic.

Wibble on April 20, 2006 7:57 AM
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There was one Indian guy (Parekh?) at Accel, whatever happened to him?

Kaiser on April 20, 2006 8:37 AM
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Most VCs get too much importance in Silicon Valley. First, they are not risk takers, they make sheeps look like independent thinkers. They play with limited partners' money and entrepreneurs' ideas and hard work - and they think they help build companies! Ya, right!

Don't get me wrong, some of them are good. Hopefully, Peter Fenton is one of the good ones.

easyJob_as_a_VC on April 21, 2006 3:09 AM
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This was a good post and I agree that LP's claim for discontent with parter changes, but if they really cared they would have insisted on more "key man" partners. Typically even if they wanted this they'd have a difficult time enacting it as they already competing to invest in the fund as it is.

Note that both Jim G. and Peter F. joined approximately at the same time (1999). You might be able to make a few assumptions about this: a) they started with similar economics b) had similar position within the hierarchy of the organization.

After 6-7 years they have established enough of a track record and accumulated enough capital so that they can be free with their choices. When two people leave from the same era within 12 months i'd say that there was a misalignment between those positions in the hierarchy and probably not a great working environment for them. Partners hate to leave companies behind in which they believe in as they become attached to them over time.

Only one person left from the 1999 hiring growth...

anonymous on April 21, 2006 9:20 AM
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Peter is definitely one of the good ones.

Anonymous on April 23, 2006 11:16 PM
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Peter is terrific, as is Accel Partners in general. Peter was very helpful in our move into open source at Alfresco and continued to help guide us through our strategy.

Having been an Enterpreneur in Residence at Benchmark and worked closely with Accel, I think both firms are great. However, there is no next generation in waiting at Benchmark as some partners leave. As part of their model, all partners are equal and there are no associates or juniors. The new generation of partners has to come from somewhere. They are very lucky to have Peter.

John Newton on April 24, 2006 3:08 AM
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Folks, apologies, I got that wrong about Peter Wagner. He was promoted to "managing partner" three years ago; he was already partner at the time. See correction and update here:


Matt Marshall on April 25, 2006 8:29 PM
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