A New Generation of VCs?

26 Feb ’05

Via Infectious Greed (and note the interesting first comment), the WSJ reports (paid sub. required) on a new generation of VCs that is starting to emerge:

Rather than investing in a range
of business ideas, many of these so-called emerging funds are highly
focused, concentrating on particular regions or industry sectors. So
while Kleiner Perkins Caufield & Byers, the dean of the Silicon
Valley firms, wagered on both social-networking Web site Friendster and
the Segway scooter, Ignition has built a team of former Microsoft Corp.
and McCaw Communications Inc. executives to focus on software and
telecommunications businesses.

"We all want to find the new generation of Sequoias
and Kleiners," says Clint Harris, managing director of Grove Street
Advisors, an investment-advisory firm for institutions in Wellesley,
Mass., referring to Kleiner Perkins and another well-known venture
firm, Sequoia Capital, that backed Internet search engine Google Inc.
Staff turnover at some established firms and the poor performance of
some of them also is prompting investors to shop elsewhere.

The sums that the newcomers are raising aren’t huge.
The 15 first-time venture funds that closed last year took in about
$1.3 billion, only about 7% of what the whole industry raised in 2004,
according to VentureOne, a research firm owned by Dow Jones & Co.,
publisher of The Wall Street Journal.

But that was double what new firms raised in 2003. The
increase could be a harbinger, because in the venture-capital world,
investors of all stripes mimic bets by elite players like Harvard,
Princeton and Stanford. Already, Duke and Brown universities and the
pension funds of General Motors Corp. and Motorola
Inc. have followed suit by investing in emerging funds. Georganne
Perkins, manager of venture-capital investments at Stanford, says she
likes the fact that many Ignition partners hail from Microsoft; just
last month, the software giant’s chief financial officer, John Connors,
said he was quitting to join Ignition.

Curiously, the Journal also notes that some of the "new generation" are blogging, and mentions Martin Tobias and Rich Tong by name.  There are of course many more and they routinely post some of the best content out there.  A bunch of them are listed on the blogroll.

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