by George White
[Posted on October 31, 2007 - 4:39 PM]
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DiggSilicon Valley venture firm Shasta Ventures announced on Wednesday the closing of its second fund with $250 million under management.
Shasta's vehicle is the latest in a steady march of new fund closings this month. Shasta's second pushes the total amount of capital placed under management for October past $4 billion and could signal that the fourth quarter will be 2007's strongest.
According to Thomson Financial and the National Venture Capital Association, the third quarter saw 59 venture capital firms raise $6 billion. Through the first three quarters of this year, 182 firms have put $20.6 billion under management.
Other vehicles currently being raised include a $500 million fifth vehicle for Bay City Capital, a $350 million fourth fund for Bluerun Ventures, Peninsula Equity Partners' $150 million-targeted second fund and a $100 million inaugural fund for Sunrock Ventures.
Shasta Ventures II LP will continue the Menlo Park, Calif., partnership's strategy of backing early-stage technology companies in consumer and business Internet services, mobile and wireless, and software and infrastructure. The fund will be deployed over an investment cycle of three years.
Tod Francis, a Shasta managing director said that part of the firm's strategy is to identify companies where the venture firm's technical and marketing prowess can be put into play.
"We deliberately formed the firm to combine technology expertise and marketing expertise against end-user businesses," said Francis, "since a lot of traditional venture investing was very technical and used engineering-based business models."
"What we see going forward is that the end-user is now the largest user of technology," he continued. "Those are the ones we're going after, and they behave differently, you have to be more sensitive to the product, the interface and the way you serve customers."
Francis says that there has been an important shift in the ways that technology applications are being bought. "Before, large technology packages were being bought at the enterprise level," said Francis. "Now a lot of exciting businesses are being bought at the end-user level, whether it is for business or for the home."
The firm's philosophy is reflected in the portfolio of Shasta's first vehicle, which closed in early 2005 with $210 million. That fund, which is 80% deployed, according to Francis, has 22 companies, most of which focus on services or technology geared toward the end-user. Its investments include Internet browser developer Flock Inc., voice and text services provider SayNow and Internet services companies Mint Software Inc., Lithium Technologies Inc. and Turn Inc.
The firm has also made investments in stealth companies that have not announced their products. Shasta has set aside capital from Fund I to continue backing its current portfolio companies across multiple rounds.
Fund I has registered two exits to date. Bellevue, Wash.-based iConclude Co. was bought by Opsware Inc. for $53.7 million in cash and stock in March, while Lindon, Utah-based Logoworks, a provider of Web-based graphic designing services, was acquired by Hewlett Packard for an undisclosed amount in April.
Limited partners in Fund II were primarily endowments, foundations, pensions and family offices that were returning investors from Shasta's first fund.
