General Catalyst's Secret CEO
General Catalyst's idealist investor Hemant Taneja is quietly running the firm
Hemant Taneja somehow finds time to be an idealist and an operator.
“The right way to spend your time as an investor is the right mix of intentionality and serendipity,” Taneja told me in a recent hour-long conversation. That might not sound like earth-shattering advice, but that understated maxim has helped Taneja generate billions of dollars in returns and ascend to the upper echelons of the venture capital industry.
Since moving to Silicon Valley in 2010 and opening General Catalyst’s California office, Taneja has proved he can follow the herd, buck conventional wisdom, and play the inside game at General Catalyst — all at the same time. Now, thanks to Taneja, General Catalyst holds a substantial stake in Silicon Valley’s largest private unicorn. In another deal, Taneja generated a multi-billion dollar return from a single investment — seemingly the largest ever in digital health. And I’d heard whispers that he was quietly leading venture capital firm General Catalyst, which is in the process of raising another suite of funds.
Recently, I caught up with Taneja. I wanted to understand what’s going on at General Catalyst. Mysteriously, the firm is raising a debt fund and has recruited a bunch of high-profile names like former Morgan Stanley banker Paul Kwan and former Merck CEO Kenneth Frazier. In a move that’s been largely unremarked upon in the press, General Catalyst has filed to raise a seed, venture, and growth fund totaling $4.6 billion.
Though it took some prying until I finally figured it out for sure, Taneja is indeed running the firm. What will his do-gooder approach to investing mean for the future of General Catalyst?
A Quiet Ascension to the Top Job
In early 2021, Taneja changed his LinkedIn title from managing director to managing partner. If that was some seismic Silicon Valley event, I missed it. But quietly inside General Catalyst, Taneja had apparently taken charge of the firm.
Ken Chenault, the former American Express CEO, has the flashier title as chairman and managing director.
I asked Taneja about their respective roles and he drifted into an explanation of the “duality” of General Catalyst’s culture. “Organizationally, we think about ourselves: We’re a partnership. In some ways, we sit around the table. And we want to have this Socratic dialogue,” Taneja said.
A little exasperated, having read enough between the lines, I said, “You’re the Doug Leone of General Catalyst (with a very different personality and core values)?” And Taneja intoned almost resignedly, “Yeah, yeah.”
He said, “When we think about the firm’s strategy: How does a firm become an enduring corporation? and What is our long-term set of industries that we want to go after? I set that strategy.”
A spokesperson for the firm explained to me, “Yes, Hemant is the sole managing partner of the firm. He assumed that role in early 2021. While the firm has and still does very much act as a partnership, Hemant is setting the strategy, leading the transformation of the firm and running the operations. It’s not ‘secret’ — just no fanfare or press around it at the time.”
How He Got There
In 2010, just as he was moving to Silicon Valley, Taneja landed an investment of a lifetime. He cut a check into Stripe’s seed round. It was one of his first Silicon Valley investments.
Taneja had taught some Stripe employees during a class at MIT when he still lived in Boston. Co-founder John Collison attended one of his lectures, Taneja remembers.
Then, in 2012, Taneja led Stripe’s Series B.
General Catalyst has participated in Stripe’s seed, A, B, C, D, and G funding rounds. (Stripe is worth at least $115 billion on the secondary market and I’ve heard of offers of at least $175 billion.)
Taneja remembers thinking, “They see the future. They’re betting on what now we know as the developer movement. At that time, I didn’t fully understand, but I just knew they saw something.”
That wasn’t the only competitive deal that General Catalyst was investing in around that time.
In 2011, General Catalyst co-founder Joel Cutler shoehorned his way into a small position in Airbnb’s Series B round. General Catalyst lost out on Snapchat’s Series A round to Benchmark, which was announced in early 2013.
But General Catalyst secured a smaller equity position in the next round.
At the same time that General Catalyst and Taneja were winning hot deals, Taneja was tilting at windmills. He’d come to Silicon Valley from Boston where he’d made a string of failed clean tech investments between 2006 and 2011. Taneja now admits that he lost more than $100 million on the strategy.
But that didn’t shake his sense of conviction.
If companies like Stripe and Snapchat represented “serendipity,” Livongo definitely represented “intentionality.”
Back in 2014 when I first got to know Taneja, I would try to mine him for information about his buzzy investments, but he would always redirect the conversation to his quixotic investment in a diabetes diagnostic company called Livongo that he’d helped incubate. Taneja led the Series A round in May 2014 and led or participated in every subsequent funding round.
Ultimately, I stopped hounding him largely because I felt bad refusing to write about his idealistic health tech company.
In 2017, Taneja messaged me: “Hey – If I gave you an exclusive on a financing, will you cover it? Or you don’t like covering financings?”
I replied, “Possible but has to be fairly high value. What is it?”
Taneja responded, “Confidentially Livongo. Raised $50m. I doubled down.”
I tried to pass the story off to another Bloomberg reporter. She didn’t write about it and neither did I.
Many Silicon Valley venture capitalists shied away from Livongo too. “People in the Valley were not interested. Everybody passed,” Taneja told me.
The company expressly avoided many of the things that make health companies appealing to tech investors. Early on Taneja said, “There was no machine learning because in the early days, we said, ‘Don’t do fancy stuff with peoples’ lives. Don’t use algorithms and do the whizzbang stuff. Let’s just make it easy for people to think less about the disease and manage it effectively.’”
Eventually, though, Livongo expanded from simply helping people with diabetes manage their insulin levels to studying how to help people mitigate their diabetes based on Livongo’s large database.
When Livongo went public in July 2019, General Catalyst owned about a quarter of the company.
In 2021, that weird diabetes company that I’d determinedly ignored for years sold for $18.5 billion dollars.
My understanding is that General Catalyst still owned about a quarter of the company at the time of the acquisition, meaning that the firm’s position at the time of the merger was worth more than $4 billion.
A Principled Investor
So many investors say they’re trying to change the world for the better. It becomes hard to believe any of them. I want to write about companies and investors that are going to succeed. In my view, there are too many reporters who — understandably — root for good things to happen and let what they want to happen blind them from what’s actually going on and what is likely to occur.
Taneja always has a crusade or a new book. One time he texted me the cover of one of them.
One old text message Taneja sent to me reads, “Btw if you have good idea on how to tackle immigrations probs lmk. Thinking about spending some cycles on this stuff since it’s getting a little out of hand.”
I didn’t have a good answer for him.
But in Taneja’s case, I think my aversion to idealism disserved me.
Taneja’s posture helped him recruit top talent, land compelling deals, and chase ideas that could actually improve the world. He’s an investor in companies like Transcarent, a concierge medicine app founded by the former CEO of Livongo, and Commure, a company that’s making it easier for software developers to build healthcare applications.
General Catalyst raised a $600 million health fund in April 2021. The fund’s thesis is in part predicated on reducing the amount of money Americans spend on health care. But, of course, most moonshot Silicon Valley businesses aspire to increase the total addressable market of the industry they’re going into — not decrease it. That’s one of the inherent conflicts to Taneja’s idealistic investing strategy.
Some people will fairly pushback that I’m being gulled here. Taneja definitely has a “we can change the world” attitude that can overstate at times what’s possible. And investing inevitably raises tough questions about what doing good looks like in practice.
One of General Catalyst’s most promising private up-and-coming portfolio companies is particularly controversial. The firm was an early investor in defense tech firm Anduril — founded by Oculus founder Palmer Luckey. General Catalyst has continued to invest in subsequent funding rounds.
“This was probably the most controversial investment we’ve ever made,” Taneja said. “There was a week where the partnership got together, four days out of five to talk about Anduril. We actually wrote an internal ethics memo.”
Ultimately, Taneja said, “Our belief was net net — defense as a category needs to exist. If peace is going to exist — just given, you know, human nature, and nations and all the politics around it… And so the question is, What’s the best way to do it? What’s the way to do it that actually reduces the overhead so government tax dollars can actually go in other places? What’s the way to do it that actually reduces collateral damage?”
General Catalyst decided to pull the trigger and invest.
Not including the money it’s currently raising, the firm has raised $13.8 billion since it was founded in 2000 by John Simon, Joel Cutler, David Fialkow and David Orfao.
Today, Fialkow and Cutler are still closely involved in the day-to-day operations of the firm. Their names, along with Taneja and Chenault’s, appear on the fundraising documents. But it’s very much Taneja’s to run.
General Catalyst disclosed that it’s raising $4.6 billion, split into three funds: $812 million for a seed fund called “Creation,” $1 billion for a venture fund called “Ignition,” and $2.7 billion for a growth fund called “Endurance.” Taneja declined to talk about the fundraising effort since it appears to be ongoing.
The firm has filed to raise a $300 million structured debt fund that the Financial Times reported on in September. Taneja referred to it as the “Customer Value Fund” in our conversation. The filing states that General Catalyst has raised $100 million of the fund already. Pranav Singhvi, Rohan Ram, and Karanveer Mohan are named in the filings along with Taneja and Chenault.
Taneja offered few details on the debt fund. “That’s yet another attempt at some structured capital that helps founders build their companies in a way that’s helpful to them,” he said.
Taneja’s heart is clearly in reforming healthcare, fixing the climate, and other idealistic investment ideas. Time will tell whether Taneja’s new healthcare thesis will amount to a $100 million loss or another multi-billion return — but it’s hard not to wish him well.
Taneja told me, “If you asked me today, what is General Catalyst’s raison d’etre? It is to actually prove that the very best businesses are fundamentally in the interests of society — rather than the false choice between financial return and societal return.”
Select Deals Led by Hemant Taneja
Anduril (seed in 2017, led Series B in 2019)
Applied Intuition (led series B in 2019, co-led Series C in 2020)
Color (led the Series B in 2016, co-led the Series D round in 2021)
Commure (co-founded in 2017; led the Series A also in 2017)
Elemy (led the seed in 2020, led Series A in 2020)
Grammarly (led Series 1 in 2017)
Gusto (led the Series A in 2014)
Livongo (led the Series A 2014)
Olive.ai (led the Series E in 2020)
Samsara (NYSE: IOT) (led the Series C in 2017)
Snap (NYSE: SNAP) (invested in series B in 2013)
Stripe (seed investment in 2010, A in 2011, led the Series B in 2012)
Ro Health (NOTE: Adam Valkin led the seed in 2017; Valkin and Taneja co-led Series C for GC in 2020; and Taneja co-led the Series D in 2021, respectively)
Transcarent (co-founded in 2021; led the Series A and B)
Source: General Catalyst
The acquiring company’s stock price fell for much of 2021, so I don’t know the exact return that General Catalyst cleared. It would depend on when they sold the stock.