Joe Montana led the San Francisco 49ers to four Super Bowl wins. In 2015, he made a very different kind of play. According to CNBC, his firm, Liquid 2 Ventures, put $100,000 into a small coding start-up called GitLab. Six years later, Axios reported, GitLab began trading on the Nasdaq on October 14, 2021. The company was valued at about $11 billion and raised about $800 million.
A pitch night in 2015
Montana did not start out as a tech-focused venture investor. His earlier venture, HRJ Capital, had been a private-equity fund-of-funds rather than a direct startup investor. CNBC reports Silicon Valley investor Ron Conway introduced him to early-stage investing, mostly through Y Combinator. Montana said he wanted to learn what Conway's team looked for in young companies. In 2015, he was invited by Conway to a Y Combinator event, where he met GitLab CEO Sid Sijbrandij. At that demo day, GitLab had 10 employees and 800 contributors working on its open source project, said Sijbrandij. Paying customers included Apple, Cisco, Disney, and Microsoft. GitLab's annual sales were on the order of $1 million. Montana recalled, "We committed that night." GitLab later raised a $1.5 million seed round with a valuation of about $12 million.
A small project that grew up
GitLab, Axios notes, was an open-source project to manage code that started in 2011 and became a company in 2014. It became part of Y Combinator in 2015. By 2018, it had expanded to nine product categories, from planning to monitoring, its CEO told TechCrunch. Its older rival GitHub didn’t reach that milestone. Instead, Microsoft bought GitHub in 2018 for $7.5 billion. GitLab also fully embraced remote work and became a model for it in the year and a half before its IPO, as other companies had to switch quickly, Axios notes.
Fast growth, but heavy losses
{{/usCountry}}GitLab, Axios notes, was an open-source project to manage code that started in 2011 and became a company in 2014. It became part of Y Combinator in 2015. By 2018, it had expanded to nine product categories, from planning to monitoring, its CEO told TechCrunch. Its older rival GitHub didn’t reach that milestone. Instead, Microsoft bought GitHub in 2018 for $7.5 billion. GitLab also fully embraced remote work and became a model for it in the year and a half before its IPO, as other companies had to switch quickly, Axios notes.
Fast growth, but heavy losses
{{/usCountry}}The IPO numbers tell two different stories. GitLab’s revenue in the first half of 2021 was $108.1 million, up from $63.9 million a year ago, Axios reported. In July alone, 383 customers paid out at least $100,000 a year each. But the company also lost money. In the same six-month period, its net loss was $69 million, up from $43.5 million. CNBC also noted that GitLab spent about three-quarters of its revenue on sales and marketing. The high valuation reflected investor expectations rather than existing profitability.
What the win looked like
CNBC estimated that Montana's initial $100,000, plus some subsequent funding, was worth roughly $42 million at a $69 share price. That was at the top of the expected price range, so the final figure could have differed. Montana said his team was excited and expected a big win. It was the first IPO for Liquid 2, and he told CNBC the firm had another 12 or 13 start-ups valued at $1 billion or more.
Montana’s path was not an easy one. CNBC also reports that Montana was involved with an earlier firm, HRJ, which collapsed in 2009. He kept investing, and six years later it paid off. Montana said his partners handle the technical work, while he focuses on making contacts. The story shows how mentors, curiosity, and patience can combine. At the same time, it also shows the risks. One win does not make a formula, and his earlier setback suggests as much.