Old relationships pay off: Divergent sees big return on $327M Pliant buy

Rob Shurtleff

Divergent Ventures, a small Seattle venture capital firm, saw a big payoff today when Milipitas, California data storage drive company Pliant sold to SanDisk for $327 million. It marks the biggest return for Divergent since the firm was formed five years ago, with partner Rob Shurtleff saying that they made six times their invested capital.

Divergent was the first outside investor in Pliant, offering a term sheet to the company in the fall of 2006 shortly after the startup was formed. It went on to raise about $50 million.

“It can be a challenge to invest early in complex infrastructure technologies because it can take a while to build an A round syndicate, which we ultimately did with Lightspeed in early 2007,” explained Shurtleff.

Divergent provided the first $700,000 in capital, larger than the firm’s typical investments.

How did a small Seattle VC firm get involved with a hot storage company in the San Francisco Bay Area?

Quite simply, connections.

While working at Vulcan Ventures in the late 90s, Divergent’s Kevin Ober invested in the founders’ previous company, Terastor. That deal didn’t work out, but Ober kept in touch and maintained a good relationship with the founders as they formed Pliant.

Good thing he did.

Divergent isn’t a typical VC firm. It has raised $7.5 million through two funds, raising the funds from individuals rather than large institutions.

Divergent also saw a positive return when Ohloh — a social network for open source developers — sold to Sourceforge last year. The firm also is an investor in Hyperquality, RNA Networks and Space Curve.

“We might be called a ‘super angel fund,’ as all of our investors are individuals,” said Shurtleff. “But we use a traditional venture model focused on infrastructure deals and deep tech opportunities.”

  • http://www.wealthvisor.com Chip Treverton

    Great work Kevin and Rob!  You have consistently invested at a very early stage and remained focused on your strategy.  Really nice to see you chalk up a win.