Software VC Tucks Fund for UC San Diego Deals into New Venture Fund

4/9/14Follow @bvbigelow

David Schwab, a managing director at Sierra Ventures, has created a new venture fund with an unusual provision—20 percent of the capital raised will be focused on commercializing innovations coming out of UC San Diego.

Schwab, who joined Menlo Park, CA-based Sierra Ventures 18 years ago, said in a phone call yesterday that he is leading a group of UC San Diego alumni in the formation of a fund within a fund—the Triton Technology Fund within his new Vertical Venture Partners fund.

“The unique thing being done here is that the Triton accelerator fund is a wholly owned and managed fund within the Vertical Venture Partners fund,” Schwab said. The Triton fund will invest in companies and technologies invented by UC San Diego faculty, students, and alumni in software, communications, electronics, materials, medical devices, and instruments.

The new fund provides a much-needed new source of seed funding for San Diego’s innovation community, although the focus on deals affiliated with UC San Diego wouldn’t necessarily limit investments to the San Diego area.

David Schwab

David Schwab

Schwab, a UC San Diego graduate, said he would be unwinding his role at Sierra Ventures, which has been investing from its tenth fund since 2011. Vertical Venture Partners will be based in Palo Alto, CA.

Schwab declined to say whether any other VCs are joining him at Vertical Venture Partners, or how much he plans to raise. One source indicated that Schwab initially planned to raise $50 million for the Vertical Venture Partners fund, which would put the Triton fund at about $10 million. But Schwab deflected questions on fund-raising, saying, “There will be more to say about Vertical Venture Partners in a month or two.”

The effort to create a small fund dedicated to UC San Diego entrepreneurs began with Rosibel Ochoa, executive director of the von Liebig Entrepreneurism Center at the Jacobs School of Engineering. The center helps commercialize technology invented at the engineering school and educates engineering students in entrepreneurship.

In an e-mail this morning from Honduras, where she is traveling this week, Ochoa says the idea for the fund started … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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