Joseph “Joe” Montana, iMFL co-founder and retired National Football League (NFL) player, speaks during an interview in San Francisco, California, U.S. on Tuesday, April 30, 2013.
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Joe Montana won his first Super Bowl as the NFL quarterback in 1982. Nearly four decades later, he was on the verge of getting his first public offering as a venture capitalist.
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 spent the past six years investing in startups through his company, Liquid 2 Ventures. He started with a $28 million fund, and is now in the process of closing his third fund of more than three times the size.
One of Liquid 2’s first investments was announced in July 2015, when a code repository called GitLab raised an initial $1.5 million round after going through the Y Combinator incubator program. GitLab’s valuation at the time was about $12 million, and other co-funders included Khosla Ventures and Ashton Kutcher.
On Thursday, GitLab is set to go public on the Nasdaq with a market capitalization of nearly $10 billion, based on a share price of $69, the upper end of its range. Montana’s initial $100,000 investment, along with some subsequent financing, is worth about $42 million at this price.
“We are all very excited,” Montana, 65, said in an interview this week, while on vacation in Italy. “That would be a beast for us.”
Joe Montana #16 of the San Francisco 49ers celebrates after they scored against the Cincinnati Bengals during 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 getting involved with startups have become a trend in Silicon Valley — from NBA superstars Stephen Curry and Andre Iguodala to tennis legend Serena Williams — Montana has jumped into the game much earlier. Prior to Liquid 2, Montana was working with a company called HRJ, which was founded by former 49ers stars Harris Barton and Ronnie Lott.
HRJ, which invested in other funds rather than companies directly, collapsed in 2009 and is being sued for allegedly failing to meet its financial obligations.
But rather than returning to the sport that brought him fame in an executive role or as a broadcaster, like many of his fellow quarterbacks, Montana stuck to the investment. This time he took a much different path.
Convinced by Ron Conway
Ron Conway, the super-owner of Silicon Valley known for its lucrative bets on Google, Facebook and Airbnb, has begun showing Montana around the world for early-stage investing, primarily through Y Combinator. Montana, along with a growing group of seed investors and celebrities, has attended Y Combinator Demo Days, where entrepreneurs showcase segments of their companies with always growing to the right.
“We were trying to figure out what their secret sauce was, who they were looking at and what they were really looking for in early stage companies,” Montana said, referring to Conway and his team. “He started taking us there, and we started making some investments here and there, and then he convinced me to start a fund.”
In 2015, Conway was speaking to the newest group of founders on Y Combinator, and invited Montana to the event. This is where Montana met GitLab CEO Sid Sijbrandij, a Dutch entrepreneur who turned 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, ‘This is a special guy,'” Montana said. “We committed that night.”
GitLab had just come out of Y Combinator. In his presentation on Demo Day in March, Sijbrandij told the audience that his company has 10 employees along with 800 contributors working on an open source project. He said GitLab was on track to achieve $1 million in annual sales, and its payment clients include Apple, Cisco, Disney and Microsoft.
GitLab CEO Sid Sijbrandij at the company event in London
JetLab now employs more than 1,350 people in more than 65 countries, according to the prospectus. As it prepares to enter the public market on Thursday, GitLab’s annual revenue has surpassed $230 million. Sales in the second quarter jumped 69% to $58.1 million
However, with GitLab spending the equivalent of three-quarters of its revenue on sales and marketing, the company posted a net loss of $40.2 million last quarter. Much of the marketing budget is focused on expanding the user base of DevOps (a combination of software development and IT operations).
“To drive the growth of new customers, we intend to continue investing in sales and marketing, with a focus on replacing DIY DevOps within larger organizations,” the company said in the prospectus.
“I still listen to the stadiums”
For Montana, GitLab marks his company’s first initial public offering, though he said “we have 12 or 13 other unicorns in the portfolio,” referring to startups worth $1 billion or more. Among them are Anduril, a defense technology company led by Palmer Luckey co-founder of Oculus, and autonomous vehicle testing company 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 startup to Google and became a product manager there; and Nate Montana, son of Joe, who previously worked at Twitter.
Montana said he participates in the fund on a daily basis and attends partner meetings every Tuesday. He said his partners, who are more tech-savvy, take a lot of technical care and deal sourcing, while he focuses on helping wallets with connections in his network.
“Until the pandemic, I was still talking all over the country,” Montana said, adding that he didn’t start making his salary until the third fund. “I’ve been talking to companies like SAP, Amex, Visa, and many of the big companies, like big insurance companies right up to Burger King.”
Specific to GitLab, Montana said he linked Sijbrandij early on to a senior Visa executive, when the company was looking to strike a deal with a payment processor.
“I still listen to the stadiums, I go to the stadiums and do all that,” Montana said. “But my time would be better spent now helping connect these companies as they mature.”
Watch: Co-founder and CEO of JetLab on the future of work during and after the pandemic