How (and why) VCs party at South by Southwest

Guests attend The Ally Coalition after-party with AboveAverage @ Soho House Austin with GREY GOOSE Vodka & BMWi pop-up during SXSW on March 16, 2015 in Austin, Texas
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Guests attend The Ally Coalition after-party with AboveAverage @ Soho House Austin with GREY GOOSE Vodka & BMWi pop-up during SXSW on March 16, 2015 in Austin, Texas

It's as if Sand Hill Road moved to Austin for a long weekend. Kind of.

Among the scores of party throwers at the South by Southwest Interactive festival over the past five days, there was a who's who of Silicon Valley venture capital firms, many from Menlo Park's legendary Sand Hill Road.

Andreessen Horowitz, Bessemer Venture Partners, Kleiner Perkins Caufield & Byers and Mohr Davidow Ventures all hosted very loud, very crowded shindigs with local Austin bites and long beer lines. Comcast Ventures, based in San Francisco, had one as well. (CNBC is owned by Comcast, the parent company of Comcast Ventures.)

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To some degree it's obvious why the big money start-up financiers would want such a presence. Annually, some 30,000 people, many from early-stage companies, swarm the Texas Capital to talk tech. So let serendipity do its thing.

But SXSW is a zoo. Everyone is in hyper FOMO (fear of missing out) mode. I've said my hellos, had a taco, now off to wait in a long line at the next thing.

Why fight the madness?

"We can meet Bay Area entrepreneurs very easily, but we're a global firm, and people tend to descend on Austin," said Ethan Kurzweil, a partner at Bessemer, which held its party at the office of Main Street Hub, a portfolio company. "We want to be here to meet them where they are."

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Kurzweil has been going to SXSW for eight years, and for the last five the firm has hosted a gathering, whether over a barbecue dinner or more recently the wild party.

Jim Lussier, head of Dell Ventures, was among those attending Andreessen Horowitz's gathering at Bob's Steak & Chop House (serving a world class lamb chop). Lussier is in Austin frequently, because it's the hometown of his parent company, but he's based in Silicon Valley.

"It's a great crowd," he said. You're always "running into people you didn't know were here who introduce you to someone else and that opens up a whole new relationship and opportunity."

The potential good fortune for the VCs throwing the parties may have nothing to do with a future investment opportunity, but what can happen when you bring people from many existing portfolio companies into one festive place?

"There's a chance to interact with other folks in portfolio companies or other people they may invite that you don't ordinarily get to see in the Bay Area," said Karen Roter Davis, general manager at Urban Engines, which raised money last year from Andreessen Horowitz. "I talked to a prospective customer—we bumped into each other waiting for drinks and we just chatted. It turned out that there was a potential opportunity there."

The mood at Kleiner Perkins has been anything but festive of late. The firm has been in the headlines for more than two weeks, defending itself in a high-profile sexism case after being sued by former partner Ellen Pao.

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While the Pao topic came up plenty at SXSW, Kleiner portfolio companies, partners and friends still crammed into the Iron Cactus Mexican Grill & Margarita Bar on Sunday night. Earlier in the day, John Maeda, the firm's design partner, presented his design in tech report to a crowded house in the convention center.

As for SXSW as a whole, Maeda compares it to "Davos, but for young people." (Tweet this)

Or chaos, if you ask investors like Holly Maloney of North Bridge Growth Equity. Maloney, who's based in Boston, loves coming to SXSW to meet entrepreneurs. She's a big fan of the Austin tech scene and an investor in local software start-up WPEngine.

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Rather than trying to compete with the dozens of other VC, banker, lawyer and start-up parties during SXSW, North Bridge is going to wait until it can be the main event.

"It's hard to make sure you get all the people you want in a room when it's stop in, stop out," Maloney said.

North Bridge doesn't yet have a party scheduled for Austin techies. Everybody needs a little time to sober up.

"We want to have it post-South by hangover," Maloney said