Dan Primack

The latest on private equity, M&A, deals and movements — from Wall Street to Silicon Valley

Ex-Gaia Online CEO joins VC firm

May 2, 2011: 1:37 PM ET

Craig Sherman

Craig Sherman has agreed to join Meritech Capital Partners as the later-stage VC firm's fifth partner, Fortune has learned. An official announcement is expected tomorrow.

This was the new partner we referred to last week, in a post about Meritech raising $425 million for its fourth fund.

Sherman most recently spent four years as CEO of Gaia Online, a virtual world for teenagers that is known for its anime-style characters, in-world games and heavily-utilized message boards. He stepped down last August -- allowing Facebook (fluff) Friends creator Mike Sego to take the helm -- although he remained on the board of directors. He also has made several angel investments, and sits on the boards of startups like Kongregate and SocialShield.

Prior to joining Gaia, Sherman spent just over one year as an entrepreneur-in-residence with Benchmark Capital -- which had invested in Gaia. Before that, he was chief operating officer of Ancestry.com and spent time in executive roles with AIG and Cendant Corp.

I've put in a call to Sherman (who already has voicemail at Meritech's offices), and will update this post if he responds. The main question I want to ask is why he chose to join a later-stage investment firm like Meritech, given that most of his experience seems concentrated in the earlier stages. for example, one of the few "paper" connections I see between Sherman and Meritech is a common investment in ZipCar (ZIP) -- but Sherman was in much, much earlier.

Update: Meritech partner Rob Ward called to discuss the hire. He said that Sherman and Meritech first got to know each other via Meritech's investment in website design company Homestead (later acquired by Intuit), where Sherman was on the board. He also said that Sherman had his pick of several VC jobs, most of which were at early-stage firms:

"He was great at helping Homestead build a subscription-based business based on CPA levers and things like that," Ward explained. "That type of knowledge is helpful at the early stages, but even more important at the later stages… He's relentless and thoughtful, and really is the right fit for us."

Update II: Sherman also rang in: "Meritech invests in the great businesses with a capital 'G.' The Disneys and Apples of this generation. Early-stage firms have the same ambition, but their jobs are more about guesswork -- mostly, they invest in companies that get bought by those great companies.... I also have experience of being at Ancestry.com, which I think is one of those great companies because it's gone public, grows larger every year and impacts millions of human beings. Also, I personally invested in a few late-stage companies like NetQuote and SurveyMonkey. I also invested both early and late in ZipCar."

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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