How Menlo Ventures landed a stake in Uber by leading a $32M Series B at the last moment, after a16z failed to accept Uber's terms, and went on to reap billions
Kate Clark / TechCrunch : Tweets: @kateclarktweets and @kateclarktweets Tweets: Kate Clark / @kateclarktweets : Some other good nuggets here, like how Menlo celebrated Roku's IPO w/ boxes of popcorn filled with $2k cash bonuses for the admins. And that the firm passed on Pinterest and Snap and very nearly led Square's Series B, ultimately losing to Mary Meeker. http://techcrunch.com/... Kate Clark / @kateclarktweets : .@A16z was set to lead @Uber's 2011 Series B, while @MenloVentures, per @alexrkonrad's @Forbes story, was used as a “stalking horse for leverage. When A16z refused Uber's lofty terms, it turned to its 2nd choice. The inside story of Menlo's Uber stake: http://techcrunch.com/...
Context & Ripple Effects
This retrospective lands at a telling moment for Andreessen Horowitz: just weeks earlier the firm raised a new $2B fund and registered its 150 employees as financial advisers so it could push into riskier bets — a posture built for a market where walking away from a term sheet, as a16z did on Uber's 2011 Series B, hands the deal to whoever says yes. Menlo Ventures was reportedly kept in the process as a stalking horse for leverage, then closed the $32M round when a16z refused Uber's lofty terms.
The payoff side of the story is already documented in the corpus: Menlo and Benchmark lined up to sell shares into SoftBank's 2017 tender at a $48B valuation, and Quartz later noted [[a:941547|Benchmark made billions on its early Uber stake while late-stage investors' profits remained unclear]]. The article also rounds out Menlo's record — passes on Pinterest and Snap, a Square Series B lost to Mary Meeker — framing Uber as the outlier that defined the firm.
First-order effects
- Menlo Ventures converts a last-minute $32M check into one of the largest venture returns on record, while a16z's refusal of Uber's terms leaves it on the sidelines of the decade's defining mobility outcome.
- Uber closes its 2011 round on the terms it wanted, having used Menlo's presence to extract them from a16z.
Second-order effects
- The SoftBank tender gives Menlo and Benchmark partial liquidity years before the IPO, letting early holders de-risk while questions linger about whether late-stage buyers like SoftBank and Saudi Arabia's PIF ever saw comparable profit.
- a16z's move to register staff as advisers alongside its new fund reads as a competitive answer to exactly this failure mode — building capacity to meet founders' aggressive terms rather than lose rounds to rivals.
Third-order effects
- If the pattern holds, term-sheet leverage in hot rounds structurally favors founders, forcing firms to choose between discipline and access — with the biggest outcomes accruing to whichever firm accepts the price.
- The Uber cap table becomes the template case for early-versus-late return asymmetry: seed and Series B investors capture the bulk of value while mega-fund late entrants absorb pricing risk, pressuring late-stage funds to justify their entry prices.
The trend: Venture returns are concentrating in a handful of early checks won by firms willing to accept founder-friendly terms, while late-stage money pays up for scraps of the same cap tables.