Openview Venture Partners, a prominent investment firm based in Boston, Massachusetts, has recently sent shockwaves through the venture capital world. In a sudden move this week, OpenView Venture Partners abruptly suspended new investments and laid off half of its staff, a drastic measure that includes the dismissal of all vice presidents and associates. This upheaval has cast a shadow of uncertainty over the future of the Boston-based firm. Sources familiar with the situation have revealed to Forbes that the drastic decision was triggered by the departure of two of its key leaders, Mackey Craven and Ricky Pelletier, just months after the firm successfully raised a substantial new fund.
While the majority of OpenView Venture Partners’ investing partners, including Blake Bartlett, the firm’s third leader, founder Scott Maxwell, and approximately ten lower-level partners, are remaining, the future direction of the firm is unclear. A source indicated that there is a possibility OpenView Venture Partners may resume new investments at some point.
It has been reported that OpenView Venture Partners has only deployed around $80 million from its recently secured $570 million fund, its seventh fund which closed in March. The remaining staff are now focused on supporting the firm’s existing portfolio companies and developing a revised strategy to present to limited partners regarding the firm’s future trajectory.
Both Pelletier and Maxwell have declined to comment on the situation, while Craven and Bartlett could not be reached for comment. OpenView Venture Partners has not yet issued an official response to requests for comment.
The unexpected turn of events this week follows a period of internal turbulence within OpenView Venture Partners, marked by a leadership vacuum. Shortly after the announcement of its new fund earlier in the year, Pelletier resigned from his position, choosing to exit the venture capital industry altogether. He is reportedly now investing in small businesses within the New England region, including ventures such as car washes. Then, in November, Craven informed the remaining leadership team of his intention to step down, a decision that reportedly surprised his colleagues. The precise reasons behind Craven’s departure remain unclear, though sources suggest personal circumstances may be a factor. During an all-hands meeting on Tuesday, leaders informed employees that Craven’s departure was not motivated by plans to join another investment firm.
Bartlett, who had been on sabbatical, was urgently recalled last month in an attempt to stabilize the firm. However, these efforts were ultimately unsuccessful as Craven remained firm in his decision to leave, and Bartlett found it unsustainable to lead the firm alone.
Founded in 2006 by Maxwell, previously an investor at Insight Partners, OpenView Venture Partners manages approximately $2.4 billion in assets. While Maxwell remains involved in the firm’s leadership, he had transitioned to a less central role in recent years, passing the primary management responsibilities to Bartlett, Craven, and Pelletier. OpenView Venture Partners has seen significant successes, with partners and backers realizing substantial returns, notably through Craven’s investment in Datadog, a New York-based cloud software company. Datadog’s successful IPO in 2019, stemming from Craven’s investment, earned him a place on Forbes’ 30 Under 30 list for Venture Capital in 2017. This success may have contributed to the appeal of stepping away from the venture capital industry, particularly for a firm like OpenView Venture Partners, which is located outside of Silicon Valley’s concentrated tech environment.
News of OpenView Venture Partners’ challenges was initially reported by The Information on Tuesday, sparking widespread speculation within the industry about the influence of market pressures and limited partner concerns. OpenView Venture Partners’ $450 million sixth fund, largely deployed during the peak of the venture market in 2021, is reportedly showing a negative internal rate of return. This performance was a key point of discussion during OpenView Venture Partners’ recent annual meeting with investors, according to a source. However, sources deny that broader market headwinds were the primary driver behind this week’s events, noting that the leadership’s decision was made independently of limited partner consultations. Furthermore, OpenView Venture Partners still possesses substantial capital for deployment, having made only around five investments from its latest fund.
It is common for venture capital firms to include a “key man clause” in agreements with limited partners. This clause typically stipulates that investments must be paused if specific key individuals are no longer with the firm. A source indicated that while Craven’s departure technically did not trigger this clause, the leadership team determined it was necessary to halt investments and reassess the firm’s future direction. OpenView Venture Partners intends to provide laid-off employees with at least six months of severance pay and allow remaining team members sufficient time to determine their next steps.
Looking ahead, if OpenView Venture Partners does not resume new investments, several options are available. One possibility is to utilize a portion of the remaining $500 million in LP commitments to support its existing portfolio companies. Alternatively, OpenView Venture Partners could choose to sell its stakes in these startups to other investment firms and return all capital to its limited partners.
A third, though considered less probable, option involves presenting limited partners with a restructured leadership team that would resume new investments. This path would present significant challenges, particularly given the current competitive venture capital landscape that favors AI startups over the enterprise software companies that have traditionally been OpenView Venture Partners’ focus. As one source stated, “It depends on if the guys want to do it. They’re very capable people, but the challenge is, are they all in?”
Alex Konrad contributed reporting.
This story was updated after publication to include information about OpenView’s recent annual meeting with investors.
