Ron Conway’s Web 2.0 tour de force, and VentureBeat’s mea culpa

It is time for our mea culpa on our coverage of Silicon Valley angel investor Ron Conway.

Not because Conway has become the most prolific investor in Web 2.0 companies, with more than 100 companies backed in less than a year and a half.

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But because we’ve been critical of Ron Conway for his investments during the Internet boom, saying they were symbolic of the era’s hubris. During that heady time, he threw lavish cocktail parties, and raised cash from a group of all-stars, including people like Arnold Schwarzenegger, Tiger Woods and Henry Kissinger — which he then invested into start-ups. We’d assumed that Conway had ended up losing money on his hundreds of dot-com investments, a correct assumption until a year or so ago.

Turns out, Conway has made money for his investors, VentureBeat has learned. His first fund, Angel Investors I, raised and invested in 1998, has seen a seven-fold return (7x), and his second fund, raised and invested during 1999, has seen a 1.5-fold return (1.5x). The latter assumes a $500 share price for Google, a company that Conway had backed with a small portion of his funds. That’s quite good, considering most investors in 1999 have seen a return of about 25 cents on the dollar.

Conway is now doing it all again. He’s made more investments than anyone else in Web 2.0, having backed more than 100 companies since June 2005, which is when he sold his interest in first two Angel funds to CSFB, and began investing his own money. Some companies he has backed are Digg, Zooomr, BuzzLogic, Perenety, PBWiki, Rupture and Vizu.

Question: Will he make more money, or less money this time around?

Update & clarification: Upon further reflection, the lesson here is a powerful one, even if it sounds mundane, and that’s to invest for the long-term. We should clarify, we’re told Conway distributed the Google shares to his investors at three different points, varying in prices, and the highest being at just over $200/share. Venture funds are always measured based on the value at distribution (seldom calculated “if held”), and when calculated that way, Conway’s returns are lower than stated above. Still, had you held to the shares he distributed to you, you’d be doing well — much better than we’d assumed just a couple of years ago.