In this talk, former NFL player and venture investor Harris Barton recounts how, after leaving Capital Dynamics in 2010, he partnered with George Roberts of KKR to launch a novel co‑invest/direct‑invest fund. Rejecting the conventional, “boring” fund‑of‑funds model and constrained by a non‑compete, Barton devised a structure where 30 prominent investors each bought a 40 % stake in his management company for $150,000 and committed $1 million to a co‑invest fund. This capital (about $4.5 million for the management company and $30 million in co‑invest commitments) funded a lean operation that leveraged the partners’ networks to source deals, provide hands‑on support, and invest modest amounts alongside leading VCs. Barton illustrates the model with examples such as Palo Alto Networks, Workday, Cloudera, Pure Storage, and Nebula Networks, describing how he adds value through sales‑team engagement and personal relationships. After his non‑compete expired, he also created a fee‑free fund‑of‑funds to further source co‑invest opportunities. The narrative emphasizes the importance of relationship‑driven deal flow, the strategic use of small co‑investments to complement larger VC rounds, and the success of a partnership‑centric investment approach in the modern enterprise‑tech wave.
Chapters
And so in 2010, George Roberts of KKR, who's become a great friend of mine, approached me and said, listen, you need to get out of there. You need to start your own business. You need to start all over again. Okay? He said, you don't have any equity in the Capital Dynamics, Silicon Valley Bank. You're done with that. And I said, George, I need a job and I need something to do. And he said, well, okay, come work in KKR, at KKR. So come work at KKR meant we got a building over here on the side that's got a small table in there that you can use as a desk. Come in here and figure it out. So I went to work with George. I went to work in George's office, which is actually in Tim's building. We have, you know, it's called KKR Capstone. And I went there in October of 2010. And in April of 2011, I went back to George and I said, here's what I want to do. I go, I've always loved— I like the fund of funds business. OK? But the fund of funds is a boring business. Right? It's just, you get into Draper. You know what? They send a capital call. You pay the capital call. Tim goes out and spends the money. And he calls you back. And you send more money in. He goes out and spends it. You spend more. And then he starts making money. He sends it back to you. So it's kind of a boring business. But the thing I always loved to do was I always loved to do what they call co-invest or direct invest. So I would walk into a company like a Data Domain or like a Google when there were 20 employees. And I'd go, hey, listen, I think I can help you drive sales. I think I can help you recruit. I think I can take your sales team to a football game. And they'd always say, hey, that's great. Why don't you do that? And so I'd do that and they'd come back and they'd go, hey, you know what? We're raising a Series B. And you know what? Kleiner Perkins is going to lead the round and Greylock is going to participate. And we'd love to have you put $1 million in. And I'd always go, well, how about $25,000? Right? Because I didn't have $1 million to put into these deals. And so I was able to go into companies like Data Domain and like Google with just a little bit amount of money. And a lot of other ones that didn't do crap, but just really enjoy watching these companies grow and how they built and ups and downs. And what it really reminded me of was really football. It's the same as a football game. You see, you put together a team, they're from different backgrounds, different religions, different countries. Everybody tries to win the Super Bowl, and that was my thrill. So I went back to George and said, listen, I can't do a fund of funds because I have a non-compete. Right? I know they're not honored here in California, but these guys are so litigious and my name had been beaten up in the media so much, I didn't want any more media attention. I said, I want to start a kind of co-invest fund or a direct invest fund. And George looked at me and said, listen, you can't— in order for you to raise $600 million and charge 2% management fee and a 10% carry, that'll kick off about $1.2 million in fees. That's about what you need to live on. He goes, there's no way you can raise $600 million. I mean, nobody's going to put that type of money in with one guy that doesn't know anything about technology and all he's going to do is rely on his relationships to get in. So he said, here's the idea that you need to do. You need to go here in the Valley, okay, back to all your friends and you got to find 30 people, okay, 30 guys that, couple things, can help you with deal flow. Number 2, help you build a new business. Number 3, really good guys. And number 4, most importantly, guys that are willing to give you a second chance. And you go to those 30 guys and you sell them 40% of your business for $150,000 each. And each one of those 30 guys will put $150,000 into your management company. So you'll raise $4.5 million. I'll give you rent here in my office for free. Don't hire a bunch of people. Use that $4.5 million to run your business. But also each one of those 30 guys will also put a $1 million commitment into a co-invest fund that you'll go out and manage. Okay? And so he said, I'll do the first unit. He said, I'll do the $150,000. And I'll do the million. Okay? And he said, you know what? And you know what? Henry Kravis, my partner, he'll do it too. And you know what? Then Jerry Yang, I haven't called him yet, but I think he'll do it. And you know what? Now go find Jim Breyer from Accel. Go see Bruce Dunleavy from Benchmark. Go back to New York and visit the guys from Fortress. And find a bunch of guys like that that— you can launch a product with. And so that's what I did. I went back and I found 30 guys like George, like Henry Kravis, like Jim Breyer, like Jeff Yang from Redpoint, like John Wileczka, like Aneel Bouchary from Greylock. All guys that are just kind of big names in the industry, guys that are good guys, guys that would be able to help me with deal flow, guys that were, willing to give me a second chance. And I launched that business in 2011. And that's what I did. And it's been wildly successful because what happens now is one of your companies gets funded by Kleiner Perkins, right? You do a Series A with Kleiner Perkins. Series B comes in and I come to you and I say, listen, you know what, you should take $20 million from Kleiner Perkins, but you should take $500,000 from my group of investors. George Roberts, Henry Kravis, Jeff Yang, John Wileczka, because these guys can help you move up the food chain. And then I went back to all the venture guys that matter, guys like Tim. And I said, hey Tim, listen, if you ever get a good idea, you know what, it doesn't have to be a 20x. Henry Kravis doesn't need 20x. He just wants me to stay in business. So if it's really, really risky, don't even show it to me. That kind of helps me deal with adverse selection. So I've been able to invest in companies like Palo Alto Networks, which just went public. I was a large investor in Workday, which is based in Pleasanton. I'm a large investor in a company called Cloudera, which is here. I'm a large investor in a company called Pure Storage. I was able to get into Andy Bechtolsheim's new company called Nebula Networks. And what I do every day is I go into these companies. I just met with a company. called Co-Raid, right? And Co-Raid, they do about $40 million in sales. Well, they need help. The sales team needs help. Well, listen, I'll tell you what. I got a box at the San Francisco Giant game for all your sales guys and all your leads. Let's go watch the San Francisco Giants play on July 19th. Well, the head of sales loves that. He picks up the phone, he calls the board of directors and says, hey, this guy's a great co-investor. He's a great guy to have on our team. You know what, the next time around, Let him put more money into the deal. So that's kind of the business model. I was also able to kind of come back when my non-compete expired and put together a fund of funds, which some of Tim's partners are investors in. The same model, the same 14 firms, but this time I'm not doing a fee aggregation model where most fund of funds are. I'm just, I'm basically giving— You're not taking a cut. the fund of funds away for deal flow so I can look into these guys' portfolios to find great deals to do co-investing. And kind of really, that's what the business is. This is an exciting time here in the Valley. I know all of you guys have reached into your pockets to come. Let me tell you what, this is really cool stuff. What's happening here in the Valley, again, especially on the enterprise side, is reminiscent of to what was going on in 1998 and '99 here in the Valley, and it's a, it's a whole new wave.
