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Almost three years ago, I left the fund I was a general partner of and decided to switch my investment focus from mid-stage enterprise software to (very) early stage consumer Internet. Dotcoms as they were, since the Web 2.0 meme had not been cornered yet. Since I had limited investment track record in that space, it was clear that raising a fund – may it be from traditional limited partners or high net worth individuals – would be impossible, or so close to it that it was not worth trying. The alternative (like any bootstrapped startup) was to start investing our own cash in some of the companies that were building a new generation of services for the consumer.

Why the consumer? Because I still could not figure out how to make angel-type investments provide any meaningful leverage/return in the enterprise software space, whereas interesting things were being built for the consumer on a capital efficient basis. So efficient that these companies sometimes managed to launch their service and even generate revenues on very limited outside investment - because hardware, bandwidth and (open source) software costs had decreased by one to three orders of magnitude. And since the burst of the first Internet bubble had drastically lowered salary expectations of early stage startup employees, overall startup costs decreased to a point that a friends and family, or angel, financing of a few hundreds of thousands dollars allowed a company to reach a number of key milestones.

Three years ago, we were busy inviting the same group of friends to a bunch of social networks. Some people were reading blogs directly on web sites or through the first generation of feed aggregators, and all VC bloggers could sit around a dining table. My initial interest in user generated content – text, pictures, audio and the very beginnings of video – led to my involvement in Buzznet (photo sharing), Truveo (video search) and Feedster (RSS search). Around the same time, I came across Userplane (private instant messaging network) for the first time – but did not engage for almost a year. I also made a conscious decision to attend a lot of conferences, events and other geek dinners. This allowed me to meet casually a number of the CEOs I would end up investing in: Dogster’s Ted Rheingold, Edgeio’s Keith Teare, Rapleaf’s Auren Hoffman,… And this blog – started in June 2004 – led me to meet another group of entrepreneurs: Kaboodle’s Manish Chandra, Maya’s Mom’s Ann Crady and Wikio’s Pierre Chappaz just to name a few. A large number of deals also came through referrals from angel investors or firms I have worked with several times.

And then there is the strategy that brings it altogether, putting each companies in a nice set of well defined buckets. I started with 3 buckets: Search, Social Media, Infrastructure. And evolved each bucket with the investments I made, and the ones I passed on. But that will be the subject of other posts in the next couple of days.

The slide below is a list of the companies I have invested in, most in cash, a few in kind, sometimes both. I have also listed two advisory boards I am/was part of: Netvibes, that I met a few days after they had closed their angel round, and MyBlogLog, that was acquired by Yahoo in January 2007 before we closed the angel round that was in the works. Were also acquired – by AOL – Truveo and Userplane, respectively in January and August 2006.

It is common practice for startups these days to keep a stealthy profile even several months after raising a round of financing, and this has delayed the (almost) full disclosure of my portfolio until… tonight. I want to point out however that I have always made these disclosure in private when required, for example when an entrepreneur has contacted me about a company that would be overlapping or competitive to one of  mine.

PS: Peter Rip has an interesting piece: Web 2.0 - Over and Out, in which he suggests that the Web 2.0 hype has peaked, and now the real work begins. We’ll also address that aspect in future posts.