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Small VC matches big VC for investment pace in L.A.

David Siemer of Siemer & Associates and Siemer Ventures.
David Siemer of Siemer & Associates and Siemer Ventures.

I had a yet another great conversation with David Siemer last week. David is a Managing Partner at Siemer & Associates, a Santa Monica-based merchant bank that also has a venture-capital arm, Siemer Ventures (started in 2007). The reason I called David up was to quiz him about his reaction to a nice write-up in Los Angeles Business Journal, pointing out that Siemer Ventures was almost even in terms of investment pace with L.A.'s largest VC firm, GRP Partners. 

GRP made 14 investments, making it the "most active" firm on the Biz Journal's list. Siemer made 13. GRP is working with $1.2 billion. Siemer is working with $35 million.

The pace is nothing new for David Siemer, however. "We're looking at doing 15 or 16 new investments this year," he said. "So far this year, we've done seven new deals." 

He duly noted that the difference between Siemer Ventures and GRP, as well as other large funds, is "bite size." GRP likes to invest between $2 and $10 million in companies, while Siemer aims for $500,000 — and to join with other investors on deals.

"We're followers, not leaders," Siemer said.

But that doesn't mean they don't run at a nice, crisp pace. "We're definitely high volume," he said of his firm, which has lately been expanding its overseas operations, looking to invest in startups in India and Asia.

"It's a straetgy that's worked well for us. Smaller companies are more capital efficient, and our model is more distributed. We look for $50-60 million in enterprise value, and we like to do our last rounds just before a company hits profitability." 

At that point, the company is ready to move on from Siemer, or be acquired by a larger company. The emphasis is on nimbleness and providing the kind of early stage investment that startups need to get some revenues coming in.

It's a well-defined approach that has made the firm successful in its niche and — to say the least — enabled it to keep busy. Very busy.