CommonAngels Ventures Raises $26.5M Fund in Shifting VC Landscape

There’s a newly raised tech-investment fund in town. Is it an angel fund or a venture fund? A bit of both, actually. But it’s been moving toward the latter.

CommonAngels, the Boston-area angel investment group, has closed its fourth fund at $26.5 million. It has also officially changed its name to CommonAngels Ventures. (Disclosure: CommonAngels is an investor in Xconomy.)

CommonAngels’ previous fund, raised in 2010, totaled $13 million. That fund began the group’s transition from an angel-network model to more of a seed-stage venture model. The new fund represents a big expansion and “crystallizes the transition” from the organization being mainly individual check writers to a fund model, says senior managing director Maia Heymann.

Investors in the new fund include serial entrepreneurs, tech industry executives, and wealthy families. It sounds like a good mix of the old CommonAngels network with quite a bit of new blood.

CommonAngels’ individual investors used to provide the bulk of capital to startups, together with contributions from its fund. Now, the deal structure is flipped and at least two-thirds of the money in any given deal will come from the fund.

Managing director James Geshwiler calls the shift “representative of the broader trend of new business models in venture capital and an increasing institutionalization of capital provided by angels.”

The seed- and early-stage tech investment landscape has gotten busier in Boston in the past few years. Among the recently established firms are Founder Collective, NextView Ventures, Romulus Capital, and Boston Seed Capital. Some of the newer funds around town are G20 Ventures, Project 11, and Blade.

For the most part, these funds are pretty specialized, with two or three general partners making the big decisions. But there is a trend toward limited partners (those invested in a fund) contributing expertise, connections, and deal flow—and CommonAngels fits right into that theme.

CommonAngels has already made 10 investments from its new fund. One company, Directr, was acquired by Google this summer. The fund’s other recent investments include Loci Controls, Dunwello, Vivoom, and Klipfolio. Heymann says the target number of companies the new fund will invest in is 25 to 30.

The firm is looking to invest $250,000 to $750,000, give or take, in tech startups trying to go to market and find customers for their initial product. CommonAngels will also make follow-on investments, to the tune of up to $2 million per company in some cases.

Heymann says the fund will maintain its geographic focus on the Northeast, including Boston, New York, Toronto, and Ottawa. “The majority of the portfolio will be in Boston, but we’re not constrained by that,” she says.

CommonAngels hopes its distributed model and network will pay off in all stages of the investment process—from finding companies and due diligence to helping companies grow and exit. But the firm has plenty of competition in early-stage investing, and that’s good for entrepreneurs.

“There’s nothing new under the sun,” Heymann says.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

Trending on Xconomy