NEA’s Barris Turns Football Loss Into More Than 150-Fold Gai

At a Northwestern University football game in October 2005, venture capitalist Peter Barris watched his alma mater suffer a 33-17 defeat to Michigan. The blow was softened by getting the best investment tip of his career.

A friend at the game told him about an entrepreneur named Eric Lefkofsky, and the two soon hit it off. Barris’s firm, New Enterprise Associates, began investing in Lefkofsky’s endeavors, including a $4.8 million bet on a startup called The Point.

That company, started in 2007 with a vague idea about “group action” and no prospects of making money, morphed into Chicago-based Groupon Inc. Less than four years later, NEA’s stake has now increased more than 150-fold to $2.28 billion, thanks to Groupon’s initial public offering this week.

“We were fascinated by the concepts, but there really wasn’t a way to monetize it,” Barris, 59, said in an interview earlier this year -- before Groupon entered its pre-IPO quiet period. “We bet on the belief that the team could mine the promising aspects of the model, and they did.”

NEA, one of the nation’s biggest venture-capital firms, can use the returns. While it had a successful IPO this year with the flash-memory startup Fusion-io Inc., NEA missed out on many of the top social-media companies, including Facebook Inc., LinkedIn Corp. and Zynga Inc. Investments in that market have bolstered the portfolios of venture firms such as Accel Partners, Greylock Partners and Union Square Ventures.

Kate Barrett, a spokeswoman for NEA in Chevy Chase, Maryland, declined to comment for this story because of quiet- period restrictions.
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