BW has a profile on DST’s new star VC Yuri Milner.
Since paying $200 million for 2% of Facebook last May, Milner has increased that stake to nearly 10%—worth perhaps $2 billion—by purchasing shares from early employees, according to two people familiar with the social network’s ownership. On Apr. 19, DST took the majority of a $135 million financing round for Groupon, a Chicago-based site offering coupons for restaurants and museums. In December, DST was the biggest investor in a group that plowed $180 million into Zynga. Milner “is a trusted adviser,” says Zynga CEO Mark Pincus, who says the Russian visits every month “to give input, but it’s a soft touch.”
On Apr. 28, DST paid $188 million for AOL’s instant-messenger service ICQ, the leader in that business in Russia and elsewhere in Eastern Europe. And with high-profile investor Jim Breyer of venture capital firm Accel Partners, Milner is discussing the possibility of an investment in Russian video-chat service Chatroulette. “Yuri has an understanding of how social applications will evolve globally,” says Breyer, who introduced Milner to managers at Groupon. “I’d like to see us work together even more deeply.”
Milner’s bare-bones staff of 20 includes seven analysts, all veterans of Goldman Sachs, Morgan Stanley (MS), or Citibank (C). They follow his lead in dress: suits, no ties. As for decor, the office has little more than PC screens and digital photo frames “to avoid distractions,” Milner says. The analysts keep tabs on some 50 Internet properties on Milner’s list of potential investments. “I follow a company for one, two, three years” before buying, he says.
Prior to pouring big money into major names like Facebook, Milner typically buys into smaller Eastern European companies using similar strategies to better understand their business models. Before Facebook, he invested in five other social networking sites including Vkontakte.ru, Russia’s largest social network. Milner and the DST team “are walking encyclopedias of Internet business models,” says venture capitalist and Facebook board member Marc Andreessen.
DST indeed has been making large bold investments. Their strategy is to simply offer the largest valuations to most promising internet companies and get large chumks of them. They see a unfulfilled demand for startup liquidity and playing ont the desire of foudners and employees to take some money of the pot. They are like an index fund of prime internet startups. not So in essence they are betting big on the future of internet. It seems like a pretty smart bet.
