Ron Conway

Angel investor

• Born: September 9, 1951
• Place of Birth: San Francisco, California

Primary Company/Organization: SV Angel

Introduction

Ron Conway is an angel investor—typically a wealthy individual who invests money (typically amounts from $20,000 up) in high-potential start-up firms, often as a source of initial funding before venture capitalists become involved. He has invested in almost every major Internet start-up since the 1980s, including Google, Facebook, PayPal, and Yelp. He is also well known for saving distressed young companies from certain failure by tapping his extensive network of capital sources. In 2005, Conway left Angel Investors LP, the fund he founded in 1998, to launch SV Angel. SV Angel is a venture capital fund that provides investment support to young companies primarily in the technology sectors that cannot secure funding through traditional investment channels. To many observers, Silicon Valley would not be the same without Conway and his unrivaled track record of investment volume and success.

Early Life

Ron Conway grew up in the San Francisco Bay Area during the 1950s. His father was a top executive at a shipping company called American President Lines. His mother raised the couple's twelve children: six boys and six girls. Conway and his twin brother were the sixth in birth order, making them the middle children. The entire family regularly attended church services at nearby Nativity Church in Menlo Park, California. Together, the Conways took up the entire last pew as well as some of the standing-room overflow space behind. Conway attended Catholic schools in both San Francisco and Atherton, California. He received average grades and thus was not an exceptional. Upon graduating from high school, he enrolled in community college, then transferred to San Jose State University, where he earned a bachelor's degree in political science.

Conway's first professional job was with National Semiconductor in Santa Clara, California, where he held several marketing positions. He moved through the company echelons and by 1979 was ready to launch his own company. That firm, Altos Computer Systems, was one of the earliest manufacturers of multiuser computers. Within three years of cofounding the company, Conway took it public and instantly became a multimillionaire.

Life's Work

As the president and chief executive officer (CEO) of Altos Computer Systems, Conway orchestrated a successful initial public offering (IPO) of Altos stock in 1982. The deal garnered him his first millions. He continued to lead Altos until 1990. At that time, he took the helm of Personal Training Systems, a leading multimedia desktop training firm. He stepped down as the company's president and CEO in 1995. Conway then made the transition to angel investing, which involves putting up one's own money to back emerging companies in need of funds.

In 1998, Conway formed a fund designed specifically for angel investing. He aptly named it Angel Investors LP. He would serve as the fund's managing partner until 2005. By investing a small stake in high-potential enterprises before venture capitalists recognize a start-up's potential value, Conway has helped hundreds of companies gain contacts, credibility, and success. For example, without Conway, there may not have been a Google or a PayPal. The two companies are characteristic of the types of business enterprises that pique Conway's investing interest and characterize the level of success achieved by many of his beneficiaries.

In 2001, however, the successes of both Google and PayPal was uncertain. Both firms were starting to implode, which would have meant significant losses for Conway financially as well as in terms of his credibility. An IPO of PayPal stock in 2002 turned things around. Google followed with an IPO in 2004. As a very early investor in both companies, Conway recouped his initial losses and was once again firmly in the black on both counts. The experience confirmed his belief in his investment approach: Take the risk to get in early with promising start-ups, and reap high rewards.

When he emerged on the other side of the potential declines of Google and PayPal, Conway found himself facing more competition from other investors, who by then had recognized the potential of Internet start-ups, which required relatively small amounts of seed money but had the potential to generate substantial gains. By that time, however, Conway had found a more specific niche: Web 2.0. He quickly became one of the biggest financial backers for social media–focused start-ups, including Ning, Rock You, and Yammer. Using that strategy, Conway again saw significant successes. By 2010, more than thirty of the companies in Conway's portfolio had been acquired by industry leaders. One of the notable sales involved Amazon's purchase of online shoe retailer Zappos, a Conway-backed company.

Conway has earned a reputation for predicting winners, but that has not always been the case. For instance, Conway invested in a podcasting company named Odeo that was being run by entrepreneur Evan Williams. When Odeo failed, Williams returned to Conway the money he had invested in the start-up. Rather than reinvesting the funds right away on the next suitor in line, Conway set them aside and resolved to use the money to fund the next start-up that Williams wanted to launch. True to his word, Conway held onto the money until Williams approached him with another start-up idea: Twitter. According to Twitter cofounder Biz Stone, Conway did more than help the project get off the ground financially; he also helped the entrepreneurs locate office space and introduced them to key players in the industry.

Providing that type of service is exactly why Conway founded SV Angel. SV Angel is an investor-supported fund that has been providing financial support and business development advice to technology start-ups that might otherwise fall under the radar of traditional investors and lenders. From 2005, when Conway cofounded the fund, through the end of 2011, SV Angel grew its portfolio to nearly three hundred companies—many notable, some still emerging. At the same time, in 2018, it was announced that SV Angel would no longer be raising funds from outside of the firm for the foreseeable future. However, this "back to basics" decision was temporary. In March 2022, SV Angel had raised $269 million for its first-ever grown equity fund.

In addition to SV Angel, Conway founded several other enterprises, including content registration firm SNOCAP in 2003 and advertising solutions provider Anchor Intelligence in 2006. He has also shared his expertise and experience as an adviser or board member with a significant number of technology companies: Associated Content, Backflip, Plaxo, and ViTrue, to name a few.

Personal Life

Conway is active in supporting his community. He cofounded the UCLA Venture Capital Fund to provide investments that benefit the University of California, Los Angeles. He has also served on the university's development committee. For several years, from 1999 to 2002, Conway was a member of the DAPER Venture Capital Fund, which benefits the Stanford University athletic department. He has also chaired the development committee of the Ronald McDonald House and the Packard Children's Hospital in Stanford, California. He has been on the development committees of St. Francis High School, Sacred Heart Schools, and the University of California, San Francisco, Medical Center. Conway was the driving force behind the San Francisco Citizens Initiative for Technology and Innovation (sfciti.com) in early 2012; the initiative saught to generate sustained civic support by leveraging the power of the city's technology sector.

Conway and his wife, Gayle, have three grown sons: Ronny, Danny, and Topher. Topher serves as a partner at SV Angel.

Bibliography

Brush, Candida G., Linda F. Edelman, and Tatiana S. Manolova. “Ready for Funding? Entrepreneurial Ventures and the Pursuit of Angel Financing.” Venture Capital 14.2–3 (2012): 111–29. Print.

Geron, Tomio. “Ron Conway's Data on What Makes Successful Entrepreneurs.” Forbes 23 May 2011: 34. Print.

Helft, Miguel. “The Silicon Valley Startup's Best Friend.” Fortune 165.3 (2012): 90–102. Print.

Payne, William H., and Matthew J. MacArty. “The Anatomy of an Angel Investing Network: Tech Coast Angels.” Venture Capital 4.4 (2002): 331–36. Print.

Robinson, Melia. "Why the 'Godfather of Silicon Valley Wants to Write Smaller Checks." Inc., 1 June 2018, www.inc.com/business-insider/ron-conway-silicon-valley-investor-godfather-sv-angel-wont-raise-new-fund.html. Accessed 6 Mar. 2024.

Sarasvathy, Saras D., et al. “Prediction and Control under Uncertainty: Outcomes in Angel Investing.” Journal of Business Venturing 24.2 (2009): 116–33. Print.

Sgrelli, Massimo. "The Ron Conway's Way." Lombardstreet Ventures Journal, 25 Oct. 2023, medium.com/lombardstreet-io/the-ron-conways-way-8a9224fd63b1. Accessed 7 Mar. 2024.

“Where Angels Will Tread.” The Economist 17 Nov. 2011. Print.