4 lessons from MentorTech Ventures’ big win on Jet’s $3.3B exit

At first it was rumored, and by the following week it was confirmed: Walmart dished out some $3.3 billion in cash and stock to acquire Hoboken, N.J.-based ecommerce company Jet.com.
According to a report from Bloomberg on Tuesday, early investors in the ecommerce company might see 2x to 15x returns on their investment, depending on when the investment was made.
“The biggest winners are investors from the first round in July 2014. At the time, Jet.com’s price tag was more than $200 million, a lofty valuation at the time considering it was an early funding round, according to one investor who participated,” Bloomberg’s Lizette Chapman wrote. “Those investors could pull in a 15-times return on their investment.”
Among the firms she then listed was University City-based venture firm MentorTech Ventures.
The firm — which provides funding for Penn alumni-founded startups — made its first investment in Jet.com in June 2014, according to its managing director, Brett Topche.
The firm reportedly had a stake of at least $8 million in the company, representing its biggest investment in a single company to date. MentorTech even created a special investment fund to double down on its bet.
Though Topche declined to comment on the accuracy of Bloomberg’s return estimate or how big the win had been for the firm, he did give Technical.ly the standard “good news” quote:
“We are extremely happy with the outcome of this investment,” said Topche. “We think it’s very reflective of the progress Marc [Lore, founder of Jet.com] and his incredible team were able to make in a short period of time”

Congrats to the awesome team @Jet. It's been a great ride & I'm thrilled you allowed @MentorTechVC to be part of it https://t.co/b5Wi6lbXGc

— Brett Topche (@BrettTopche) August 8, 2016

However, Topche did open up on the lessons the firm learned from the exit and how they can resonate in the Philly investment community, which is always looking for the next big exit.

1. Invest in founders with strong track records

“Backing incredible entrepreneurs is hardly a novel thought,” said Topche. “But Marc Lore is exactly that.” The Wharton grad — and cofounder of the company behind Diapers.com, which was acquired by Amazon in 2010 for $545 million — was certainly an attractive perk for Walmart, as they tapped him to run the retail giant’s ecommerce division.

2. Invest in groups who work well together

“This [exit] reinforced the value of getting the band back together: a lot of the people with senior leadership positions at Jet also held leadership positions at Quidsi [the parent company of Diapers.com and Soap.com].”
Bloomberg reporter Brad Stone credited Jet Chief Revenue Officer Scott Hilton and Chief Operating Officer Nate Faust with adding weight to the transaction.
“There’s a huge value in backing people who have successfully worked together before,” said Topche.

3. Invest in big dreamers

“You don’t achieve a huge outcome unless you’re willing to take big bets,” said Topche. “And Jet was dreaming big.”
Especially when a giant like Amazon is the main competition.
“They were not trying to target a tiny corner of the world: this was playing about as big as it gets,” said Topche.

4. Invest big when the time is right

The good news might have not been as good without that special $5.5 million investment back in 2015. Doubling down on solid bets when the time is right was a formula that worked this time. But because it doesn’t always work, the priority, Topche said, should always be the good ol’ main fund.
“We will continue to opportunistically look at special investment vehicles when they make sense, but we will only do that if and when we’ve already used up our allocations within the fund,” said Topche. “Our first priority is our main fund and our investors.”