A new venture firm focused on early-stage technology companies in New York has debuted, according to reports by Fortune and Dow Jones VentureWire.

Because of regulatory rules, Brian Hirsch, managing director of New York’s GSA Venture Partners, could not discuss the birth of Tribeca Venture Partners when contacted by Xconomy, but Tribeca’s website offers a glimpse at its DNA. Tribeca shares the same physical address as GSA Venture Partners. Much like GSA Venture Partners, Tribeca is described as a $102 million fund focused on investing in seed and early-stage companies in such sectors as digital media, e-commerce, and financial technology.

Tribeca’s site says it will dole out first round investments that range from $100,000 to $4 million to early-stage companies. So far Tribeca lists New York’s Altruik, which provides search engine optimization services, and AppNexus, a platform for buying online advertising, in its portfolio. Altruik is also listed in GSA’s portfolio.

Though he cannot talk about it yet, Hirsch is not alone at Tribeca Venture Partners. Chip Meakem, managing director with Kodiak Venture Partners, is listed as Tribeca’s managing partner. Somak Chattopadhyay, principal with GSA Venture Partners, is listed as a partner with Tribeca.

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Matrix Partners, a venture firm with offices in Waltham, MA, Silicon Valley, and New York, announced on Friday that it raised $650 million in two new funds focused on investments in Asia. The firm closed $350 million for its Matrix Partners China II fund and $300 million for its Matrix Partners India II fund. “Both countries are experiencing tremendous growth and there continues to be an enormous need for many new products and services,” said Matrix general partner Timothy Barrows in the announcement of the deal. “Our international teams remain committed to working closely with the very best entrepreneurs to cultivate new ideas and build great companies.”

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“Social shouldn’t be viewed as soft,” says University of Michigan finance professor Gautam Kaul. “Unfortunately, soft and social tend to go together in people’s perceptions.”

But Social Venture Fund, a new investing vehicle out of the University of Michigan that came out of stealth mode just last week, is taking a hard look at social inequality—and is out to prove that investments targeted at ameliorating it can make money. “We want to use rigor in measuring social impact and making investments that are real,” says Kaul, the managing director of the fund.

A handful of students approached him a year and a half ago with the idea for a social venture fund, as a new business model to help solve real-world problems, he says. He made the team formally pitch the idea to him (much in the same fashion entrepreneurs present to investors), to prove the concept went beyond a philanthropic idea, and had the potential to also generate returns.

Social Venture Fund’s team, which is now expanding and could reach a total of 30 students, has been working over the past year to develop the vision for the project and the types of companies it will invest in, Kaul says. The fund adds to the university’s group of student-run funds—the Frankel Commercialization Fund and Wolverine Venture Fund, which has had four successful exits, including an IPO. Unlike the other student-run funds at the university, Social Venture Fund didn’t start with money, Kaul says. “We felt that this was too important to wait on trying to raise money for something.” The 2010 MBA class at the school has already pledged its gift to the Social Venture Fund, which is also working on a big fundraising push.

Broadly, Kaul’s team envisions its investments falling into a handful of sectors: education, food and nutrition, health, finance, the environment, and urban revitalization. He says the team is particularly interested in looking at companies that fuse the latter two concepts, and work on solving problems that are often left to the government.

“We want to create a new type of organization that does not worry only about money making, but worries about policy and impact on society,” he continues. To do that, Social Venture Fund is looking at companies that … Next Page »

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Fund manager C Change Investments, with offices in Cambridge, MA and San Francisco, has partnered with New York-based private equity firm Vanterra Capital to launch a new fund, with a $100 million initial close earlier in August, the firms announced on Monday. The Vanterra C Change Transformative Energy & Materials Fund I (TEM) will be managed out of Cambridge and will “invest in companies that will play a key near term role in helping large industrial firms gain enhanced competitiveness through better use of energy and materials,” says John Preston, the former director of technology development for MIT and a co-founder of the fund.

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Former Googler Aydin Senkut has closed fundraising for Felicis Ventures, super-angel/micro-VC fund, at $40 million, according to reports over the weekend in VentureBeat, the Wall Street Journal, and other publications. That’s more than the $30 million Senkut said he intended to raise in a regulatory filing in June. Limited partners in the fund include both institutional investors and high-net-worth individuals such as hedge fund manager Peter Thiel, according to reports. Senkut, an active angel investor since 2005, told the Wall Street Journal he raised the fund “because he wants to shift from being a minority investor in start-ups to taking majority stakes more often.”

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Polaris Venture Partners, a $3 billion-plus venture firm, has found more capital to back technology and life sciences firms. The Waltham, MA-based venture firm has closed on $233.8 million of a planned $400 million for its Polaris Venture Partners VI LP fund, according to an SEC filing.

When people talk about the leading venture funds, Polaris Venture Partners usually finds its way onto their short lists. Terry McGuire, a co-founder and general partner of the firm, recently finished a term as chairman of the National Venture Capital Association. Under the leadership of McGuire and others at Polaris, the firm has racked up some wins over the past decade with its investments in such companies as Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ:ALNY), Cambridge-based Akamai Technologies (NASDAQ:AKAM), and the Lebanon, NH-based biotech GlycoFi (now part of Merck & Co.)

However, Polaris appears to have pared down the target for its latest fund from a previously reported $500 million to $400 million, VentureWire reported. Polaris, which also has an office in Seattle, raised $1 billion for its last fund in 2006. McGuire declined to comment on the new fund this morning.

Yet small, focused funds appear to be a way forward for venture firms, which struggled to deliver returns to investors over the past decade. Polaris has also looked to build stronger ties with the startup community through its Dogpatch Labs. Dogpatch provides early-stage entrepreneurs with cheap office space and access to a network of investors and other startups. Polaris launched the program in San Francisco in 2007 and expanded it to Cambridge and New York City last year.

Wade, who leads Xconomy’s tech coverage in San Francisco, covered the recent growth of Dogpatch’s Cambridge offices in April. At the time, Dogpatch hosted about 100 entrepreneurs at its three locations.

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Venrock VP David Beisel is joining with former Spark Capital senior associate Rob Go and former Point Judith Capital principal Lee Hower to form a venture capital fund focused on investing in early-stage companies, Mass High Tech reported today, citing venture investors close to the three. Last month Go announced he was leaving his position at Spark to start a new venture, which he didn’t name or describe any further. Mass High Tech wrote that Hower announced his departure from Point Judith the following week, but that Beisel, who Wade interviewed a few years back, has not revealed any plans to leave his position at Venrock, a firm started as the venture capital arm of the Rockefeller family.

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Intellectual Ventures has been making a lot of waves lately. Today the Bellevue, WA-based firm, focused on the business of invention and patents, laid out its arguments for creating a new industry of “invention capital,” in a Harvard Business Review article penned by CEO and co-founder, Nathan Myhrvold. In a separate piece, the New York Times’ Steve Lohr addresses some longstanding questions from Myhrvold’s detractors, who call him a patent troll (more on this below).

In the HBR article, Myhrvold, who is coming off his talk at the TED conference in Long Beach, CA, presents the thinking behind his firm’s efforts to establish a separate marketplace for inventions, loosely following the models of venture capital and private equity. He also gives a status update on where Intellectual Ventures stands, and the formidable challenges it faces.

Invention capital is really the big vision of the company—with patent acquisitions as part of its overall strategy—and it’s fascinating to see how much things have progressed since the summer of 2008, when Myhrvold first spoke with me about it. Back then, the discussion was heavy on the historical context and the need for a new system to nurture inventions and inventors. In terms of results, it was largely wait and see. Now, it’s clear the company’s efforts worldwide are starting to pay off.

Myhrvold writes that Intellectual Ventures has 30,000-plus patents in its portfolios, most of them purchased. To critics who would say the company doesn’t invent anything itself, he notes that its 30 staff inventors and 100-plus consultants applied for 450 in-house patents in 2009, placing it in the world’s top 50 filers (ahead of Boeing, Johnson & Johnson, 3M, Mitsubishi, and Toyota); and that its wider network of 1,000-plus inventors in seven countries applied for more than 1,000 patents last year.

On the technology licensing and patent acquisitions front, he writes that Intellectual Ventures has made deals with more than a hundred Fortune 500 companies and their international equivalents, and that the firm’s “licensing activity has so far earned more than $1 billion.” To put that figure in perspective, Intellectual Ventures has raised some $5 billion from mostly undisclosed large investors (Microsoft is one).

In the Times piece, Lohr quotes critics who call Myhrvold’s outfit “Intellectual Vultures” and say the company uses its huge patent trove as leverage to extract hefty licensing fees. These critics also question Myhrvold’s penchant for setting up hundreds of shell companies and affiliated entities; by masking who actually owns Intellectual Ventures’ patents, this strategy reportedly makes it more difficult for other companies to know where they stand in negotiations with Myhrvold’s firm. Myhrvold is unapologetic about these tactics in the Times article, saying he’ll give up secrecy as soon as everybody else does.

But regardless of what his critics say, Myhrvold has clearly thought a lot about the hurdles that must be overcome in order for new markets ruled by inventors to take off. Here are three of his main ones:

—Managing risk. Myhrvold points out that insurance companies, pension funds, and mutual funds have figured out strategies to deal with this, and that the money it takes is comparable to VC … Next Page »

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[[Updated: See editor's note below.]]

Founder Collective, a new seed-stage venture fund in Somerville, MA, has received total investments and commitments of $30 million from limited partner investors, Eric Paley, a general partner of the firm, told Xconomy in an e-mail. Yesterday the firm filed papers with the SEC that show that it has raised $24.4 million out of a planned $50 million in investments, but Paley noted that the group has garnered additional financing committments since the papers were finalized.  The firm was founded by Paley—a former senior advisor to IDG Ventures (now Flybridge Capital Partners) and the co-founder and former CEO of Brontes Technologies, which was acquired by 3M—and by David Frankel, the co-founder of The Internet Solution.

[[Editor's note: This news brief was updated to report that Founder Collective has recieved additional investment commitments for its seed fund since filing documents with the SEC.]]

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Waltham, MA-based Kepha Partners, founded by former Highland Capital partner Joe Tango, will announce today that it has closed fundraising on its first investment fund, totaling $100 million, according to a report in Mass High Tech. Kepha, which has already invested in early-stage tech firms in the Boston area such as AutoVirt, Azuki Systems, and Byledge, says in its mission statement that it wants to “become the McKinsey & Co. for entrepreneurs”—meaning, apparently, that it hopes promising entrepreneurs will seek it out for its startup-building acumen.

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Waltham, MA-based Atlas Venture has embarked on fundraising for a new venture capital fund, and hopes to raise $500 million, according to reports today in VentureWire and PE Hub. It’s the eighth fund the firm has raised since its founding in 1980; the seventh fund, closed in 2006, totaled $385 million.

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Andy Sack’s favorite coffee drink is a 12-ounce, single-shot, non-fat latte. But if you’re meeting with him to pitch your latest technology startup idea, be advised that he’s probably on his second or third cup already. These days, his schedule is filled with meetings and networking—most of it pretty informal. “I’ll have coffee with anyone,” he says.

On Tuesday morning, he sat down with me at Louisa’s Cafe near Lake Union in Seattle. It’s where Sack hosts his weekly “open coffee” hour, drawing a regular crowd of entrepreneur types looking to network over coffee and pastries. (“They don’t have the best coffee, but they have the best blueberry scones,” says Sack—and he’s right.) I wanted to get the full story of Founder’s Co-op, the startup fund run by Sack and fellow Web entrepreneur Chris DeVore, as well as hear feedback from the community. Back in June, I reported on the background and motivation behind the half-year-old venture. Then, just a week ago, Luke reported that Sack and DeVore have raised a new round of funding and announced 14 limited partners in the fund, all of them tech entrepreneurs who are well-known in Seattle innovation circles.

It’s a unique model, and Sack began by clarifying the terms of the new financing. The fund is $2.5 million, with each limited partner (LP) putting in $150-200K, which buys each of them a stake in all of the startups to be funded. They will meet as a group six to eight times a year. “It’s a peer-to-peer, seed-stage fund,” says Sack. “Chris and I are the decision makers—it’s not a democracy. As a group, the LPs provide deal flow and help guide our investment strategy.” Crucially, they will also provide mentoring and connections for the portfolio companies, which Sack says will typically be made up of small teams of young, first-time entrepreneurs (usually just two people).

The peer-to-peer aspect is a big part of what makes Founder’s Co-op different from the Y Combinator and TechStar incubators of the world (we’ve covered those here and here). The firm’s limited partners include Ben Elowitz and Kevin Flaherty of Wetpaint, Andy Liu and David Niu from BuddyTV, Adam Brotman from Corbis and Barefoot Yoga, and Geoff Entress, formerly of Madrona Venture Group. I asked a few of them about their involvement in the fund, and what’s special about it. “The model is special because it really helps entrepreneurs jump start their businesses,” says BuddyTV’s Niu. “They don’t have to worry about some associated startup infrastructural costs like phones, Internet, etc. if they move into the co-op’s office. In addition, they can access a wide range of ideas and experiences from Andy [Sack] and other LPs who have successfully started their own companies and want to give back to other local entrepreneurs.”

As for why he joined, Niu touts “the opportunity to work with Andy and the other LPs. I have a great amount of respect for what they have accomplished individually, and I think pooling their collective experiences will be a formidable asset that portfolio companies can tap…Of course, there is much less certainty and a higher chance to see failure when you invest in something early stage and unproven. At the same time, you can have an outsized positive influence and guiding hand to hopefully channel them towards success.”

Kevin Flaherty of Wetpaint echoes the sentiment about Sack and the other partners. “They all have miles of experience in the startup world. Being able to experience how they evaluate potential investments is a great learning opportunity for me. From a purely financial standpoint, there is a great need in the Seattle startup community for this type of investment. Matching that need with good insight provides a great opportunity for a solid rate of return,” Flaherty says. “We’ve already seen less venture interest in certain types of businesses and renewed focus on certain business metrics that for a while were undervalued. That being said, I expect there to be significant startup activity that is uniquely suited for Founders Co-op. Two folks in a garage are perfect for the fund.”

I also gathered some reactions from people outside the co-op—local angel investors and … Next Page »

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This is a revised version of an essay that Microsoft’s Don Dodge published today in his personal blog and contributed simultaneously to Xconomy.

Commonwealth Capital Ventures held their annual open house this week at their Winter Street offices on “VC Hill” in Waltham. VC Hill is to Boston/Waltham what Sand Hill Road is to Silicon Valley—the center of Venture Capital for the region.

Commonwealth Capital recently closed on a large new venture capital fund. Longworth Ventures, another Boston/Waltham based VC firm, also recently closed a new fund. In fact, over the past year or so, several Boston firms have raised over $2 billion in venture capital. While the financial markets on Wall Street are in a panic, the venture capital community in Boston is strong, with billions of dollars to invest in innovative startups.

Boston based VC firms that have raised funds over the last year or so include Flybridge Venture Capital, Spark Capital, Fairhaven Capital, Commonwealth Capital, Longworth Venture Partners, Battery Ventures, 406 Ventures, Ascent Venture Partners, and Staley Capital.

If you look over the past three years, with giant firms like Polaris Ventures, Highland Capital, and General Catalyst raising huge funds, the total funds raised in Boston exceed $10 billion.

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Waltham, MA-based Longworth Venture Partners plans to raise $180 million for a new fund, its third, according to regulatory filings cited today by Private Equity Hub. The firm’s first fund of $20.5 million closed in 1999 and its second fund of $120 million closed in 2003; recent payoffs for the firm’s portfolio include Softricity (which was acquired by Microsoft in 2006) and Constant Contact (which went public last year).

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Accretive Exit Capital, which helps venture capital and buyout firms by buying their stakes in companies they’re tired of managing or that they’re eager to monetize, said today that it has closed its first fund, totaling $125 million. The firm, based in Boston and West Palm Beach, FL, says that the fund, put together in just 45 days, is the largest first-time fund ever raised in the so-called “secondary private equity” market.

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Boston-based venture firm Rockport Capital is upping the ante on cleantech investing. The six-partner firm, which has focused since its founding eight years ago on cleaner and more efficient energy and production technologies, announced today that it has finished raising its third fund. It’s Rockport’s largest fund by a long shot, weighing in at a hefty $450 million (compared to the $385 million it gathered for its previous two funds combined). “We believe that makes it the largest fund solely dedicated to cleantech investing that’s ever been raised,” says general partner Janet Burrows James.

Plenty of local venture firms are putting money into technologies such as biofuel production methods that don’t depend on food crops, cleaner ways of burning coal, and solar cells that turn more of the sun’s energy into electricity. But Rockport’s new fund raises the bar substantially, especially when compared to the $273 million in venture money raised by all Massachusetts cleantech startups combined in 2007.

I asked James what sets the new fund apart—other than its size and its cleantech focus. But Rockport is hard to pin down, as it turns out. “We have a very broad focus,” James says. Unlike many venture firms, Rockport is “agnostic” about the stage of growth that its target companies are at, and it doesn’t limit its investments to companies in any particular geographical region. (It opened an office in Menlo Park, CA, last year to help stay in touch with the 40 percent of its portfolio companies that are based on the West Coast, James says.)

The company’s only real concentration is on a trio of fields that it describes as energy and power technologies, advanced materials, and “process and prevention,” meaning technologies that mitigate the environmental impact of industrial processes by reducing inputs or waste. But a quick glance at Rockport’s list of 28 portfolio companies shows that few fit neatly into just one of these three boxes. Most, in fact, seem to span all three—which isn’t terribly surprising, since new materials and processes are often a key part of clean energy technologies. For example, Portsmouth, NH-based Powerspan, is developing electro-catalytic oxidation systems that remove pollutants from flue gas at coal-fired electrical plants, in the process producing an ammonium sulfate compound that can be used as fertilizer.

Rockport raised its first fund of $125 million in 2001, and closed its second fund of just over $260 million in January, 2006. That fund is now fully invested in portfolio companies, so the time was right to start a new fund, James says.

Raising cash for the third fund was easy, she says. “We like to joke that this is the lowest-carbon-footprint fund raise that has ever been done,” she says. “We didn’t undertake road shows—we basically raised the funds from our existing investors and from interested outside investors who had been following Rockport and cleantech for the last couple of years.”

James calls the fund’s limited partner investors, a group that includes endowments, foundations, pension funds, and funds of funds, “a real blue-chip roster that we’re very excited about.”

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Summit Partners, a private equity and venture capital firm with offices in Boston, London, and Palo Alto, said yesterday that it has closed two new investment funds, a €1 billion European private equity fund and an $825 million subordinated debt fund. (We looked it up, and “subordinated debt” is debt that’s paid off after most of a company’s other liabilities in the event of bankruptcy. In other words, it carries greater risk, and can therefore be leveraged for greater amounts of equity in target companies.) Summit, which now has investable assets of nearly $6 billion, says it will use the funds “to acquire minority and majority positions in successful, growing companies across many industries, including technology, business and financial services, consumer and industrial products, energy, healthcare and life sciences, Internet and information services, as well as media and entertainment.”

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Dan Primack of Private Equity Hub is reporting today that .406 Ventures, the Boston-based early stage venture capital firm founded in 2005 by local entrepreneurs Maria Cirino, Larry Begley, and Liam Donohue, has finished raising its first investment fund. The firm gathered $167 million altogether, mostly from institutional investors such as Parish Capital.

Primack (one of our favorite financial reporters) apparently nagged Cirino for months for some word about the firm’s fundraising progress, to no avail—for legal reasons, Cirino couldn’t say anything publicly until the fund was closed. But she e-mailed Primack yesterday with the news that the fund had been topped off, at about $17 million over the firm’s initial $150 million target.

.406, which is named after Ted William’s record-setting 1941 batting average for the Red Sox, says it prefers to be the first investor and the lead investor in new, market-changing software and services ventures. One of its three core operating principles is “a commitment to ‘back-to-basics’ venture capital disciplines focused on operational excellence, entrepreneurial spirit and capital efficiency.” Its portofolio companies, which are all based in Massachusetts, include:

• Cambrige, MA-based Bit9, whose software allows IT managers to control which applications run on company desktops
• Boston-based Business Intelligence Advisors, which is applying intelligence-gathering techniques to business research
• Newton, MA-based ChosenSecurity, which provides public-key-infrastructure-based encryption certificates as a managed service
• Boston-based Health Dialog, whose analytics software helps health-care organizations reduce costs; .406′s first exit, the company was acquired by UK-based health insurer BUPA last year
• Concord-based Memento, which makes fraud-detection software for banks and credit unions
• Boston-based Optaros, which creates AJAX-based rich Internet applications for other companies
• Needham, MA-based RatePoint, which helps companies collect customer feedback information online
• Cambridge, MA-based ThingMagic, which makes advanced RFID hardware and software for consumer and industrial applications (see our recent story on ThingMagic’s collaboration with DeWalt and Ford)
• Burlington, MA-based Veracode, which evaluates the binary code behind complex software for security holes (see our January profile).

Cirino told Primack, however, that .406 is open to investment opportunities outside Massachusetts, and that it’s currently looking at a deal in Seattle.

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