Hemant Taneja: Building a whole new class of venture capitalists

Taneja has his critics, too. General Catalyst’s industrial-scale investing barely resembles venture capital, some say. Others snipe, discreetly, about General Catalyst’s focus shifting from generating returns from financing startups to “farming fees” from ever-multiplying funds. 

Taneja’s supporters are willing to back his bold vision thanks to a near-15-year winning streak. Since moving to Silicon Valley from Boston in 2011, Taneja has backed payment giant Stripe (last valued at $91 billion), defence startup Anduril (in funding talks at a $28 billion valuation) and a string of health care unicorns like Commure (valued at $6 billion). 

General Catalyst tapped its backers for $8 billion last year—more than some Midas List veterans have raised in a lifetime, cementing its status as a venture powerhouse. Assets have ballooned to over $36 billion from $3.8 billion just 10 years ago. And the scaling is accelerating: General Catalyst, along with archrival Andreessen Horowitz, claimed around 20 cents of every dollar invested with US VCs last year, according to Pitchbook data. 

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Silicon Valley gossip normally focuses on which startup will go public next, but recently chatter has circulated that General Catalyst itself will have an IPO. Taneja flatly denies the rumours. “It’s not even on the agenda,” he says. For a VC firm, Taneja has loads of money on tap, but his grand strategy may require even larger amounts. Blackstone, KKR and Apollo grew more than tenfold after going public as they used their freshly minted shares to fuel growth, fund takeovers and cash out old partners. But there’s still a taboo around venture funds going public: Valley graybeards still remember dot-com bomb Internet Capital Group listing on Nasdaq in 1999. The VC shop’s valuation ballooned to nearly $60 billion before plunging 99.5 percent in less than two years. 

Taneja now rubs shoulders with business leaders, prime ministers and royalty (he cohosts an annual ball at new hire Jeannette zu Fürstenberg’s family castle in Germany). 

It’s a long way from the aisles of the suburban Massachusetts CVS where he worked in high school to help his parents make ends meet. When he was 15, his parents moved to Boston from New Delhi. During the recession of the early 1990s, his father wound up managing a KFC. “I probably ate that almost every day,” he says. “I can’t look at a KFC anymore.” 

After high school, he landed at MIT. He co-founded and sold a mobile software startup after graduating, landing him on the radar of General Catalyst co-founders Joel Cutler and David Fialkow in 2001. The pair were looking for a founder to kickstart new business ideas. “He was the full package. We knew early on that Hemant could be a tremendous leader,” Fialkow says. 

General Catalyst had a handful of early wins like travel booking site Kayak (which went public for $1 billion in 2012), but its East Coast base was away from the entrepreneurial center of Silicon Valley. So in 2011, the firm’s founders tapped Taneja, along with a handful of other partners, to build a beachhead in Palo Alto.

He had his work cut out for him. Taneja’s outsider status was apparent when he was elbowed out of an early Snap investment by Valley vets. His fortunes changed after an early Stripe hire sat in on a guest lecture Taneja gave at MIT and connected him with the startup’s co-founder brothers, Patrick and John Collison. He first invested in 2010, then led the startup’s Series B two years later. While Stripe’s co-founders initially saw the company as a “little developer-oriented credit card payment thing”, Taneja saw the bigger opportunity in simplifying digital transactions more generally, CEO Patrick Collison says. “He perceived more in Stripe than we did.” (Taneja got into one of Snap’s later rounds, too.) 

Taneja’s new path was set over a bottle of Brunello during a 2017 dinner at Vicolina, a now-shuttered Manhattan trattoria, with Ken Chenault. The former Amex CEO had just been hired as General Catalyst’s chairman, partly to help manage the handover from the fund’s co-founders to heir apparent Taneja. As they dined, Chenault, who was one of the first Black executives to run an S&P 500 company, leaned across the table and pressed Taneja on what he wanted his impact to be. “I want to be a leader, not just in business,” Chenault recalls Taneja telling him. 

Taneja took over as CEO in 2021 and began transforming General Catalyst from a clubby partnership into a firm that could address social problems. Goodbye to Mark Zuckerberg’s motto of “move fast and break things.” Hello “responsible innovation.” It’s not as catchy, and it hasn’t always earned Taneja a warm reception from some of the Valley’s loudest voices and deepest pockets. General Catalyst’s advocating for guardrails on new AI systems was met with hoots of disapproval, notably from Andreessen Horowitz billionaire co-founder Marc Andreessen. 

“They’re very smart, they’re very opinionated. All that is positive in my book,” Taneja says of the rival firm. “They’re playing a different game than us.” (Behind closed doors, Andreessen and Taneja played nice when they both sat on the board of now-public freight tracking company Samsara, says CEO Sanjit Biswas.) 

Guardrails or not, AI is central to the firm’s strategy of doing rollup mergers in sectors long considered too stodgy for Silicon Valley, like IT services and human resources. Buyout funds have been doing this for decades, cutting costs by moving jobs offshore. Taneja wants to use AI. 

Last year, a General Catalyst startup called Crescendo bought PartnerHero, a $80-million-a-year call center company, and automated calls with bots, handing over only tricky cases to human workers. The result is as much as 30 percent savings for customers, says Crescendo CEO Matt Price. Dwelly, a London-based real estate startup co-founded by General Catalyst, bought a handful of property management companies and added AI tools for managing open houses and maintenance requests. Not only is AI cheaper, but the wait for fixes for leaky taps and other repairs is down 40 percent to 30 days, says Dwelly CEO Ilia Drozdov. 

To some, the strategy looks like private equity with a coat of shiny AI paint. Taneja shrugs off the notion, saying that while private equity is more focused on cost-cutting, General Catalyst’s rollups are about instilling a culture of “innovation”, albeit the type that also happens to cut costs. 

Taneja is the driving force behind these rollups, and he wants General Catalyst to co-found the firms executing them. The lodestar is Livongo, the diabetes management startup he co-founded in 2014. It went public in 2019 for $3.6 billion. That would be a home run for most investors, but Taneja was just warming up. A year later, Livongo was acquired for $18.5 billion by Teladoc, resulting in a paper gain of $3.4 billion for the fund. The outsize return was almost entirely thanks to General Catalyst’s large ownership stake (18.3 percent) as a co-founder. 

Still, Taneja is treading a difficult path. He needs to overcome local protests against his yet-to-close hospital takeover before turning around the $2 billion (2024 revenue) operation. And while Taneja is a savvy investor, he’s by no means infallible. A series of bets on climate startups resulted in a $100 million wipeout, and health insurance claim specialist Olive, once valued at $4 billion, is a total bust. And General Catalyst ended up banking only an estimated $1.8 billion from Livongo, with Teladoc’s share price crashing 97 percent from its peak. 

But perhaps the biggest risk is General Catalyst is doing too much. “I get that question a lot,” Taneja says. He says it’s a matter of having “leadership bandwidth” and a good operating model, comparing the company to Amazon, which expanded from books to data centers to grocery stores to moviemaking. 

Taneja has stretched himself to the brink in the past. At MIT, his counselor warned the triple major (computer science, biology and math) he might not finish with such a demanding courseload. He not only graduated but went on to earn master’s degrees in engineering and operations research a few years later. It’s a pattern he has carried with him throughout life, Taneja says, laughing. “I’m always trying to do too many things at the same time,” he says. “I push myself to the max.”