Correlation Ventures said it closed an initial $165 million venture capital fund that will leverage its predictive analytics to offer entrepreneurs and lead investors co-investment decisions within two weeks. The fund was oversubscribed and ended up 10% above its target of $150 million. Limited partners include leading endowments, foundations, pensions, family offices, high-net-worth individuals and more than 30 venture capital peers who invested personally, the firm said. Correlation Ventures has offices in San Diego and Palo Alto, California, and expects to make approximately one new investment each month.
Correlation Ventures Raises $165 Million in Oversubscribed Initial Fund
SAN DIEGO – January 17, 2012 – Correlation Ventures, the venture capital industry’s predictive analytics pioneer, announces the closing of an initial $165 million venture capital fund, 10 percent above the $150 million target. The firm leverages its analytics to offer entrepreneurs and lead investors co-investment decisions within two weeks. Limited partners include leading endowments, foundations, pensions, family offices, and high-net-worth individuals, including over 30 venture capital peers who invested personally.
Correlation Ventures, with offices in San Diego and Palo Alto, California, is creating a portfolio of over 50 U.S. private companies and has a broad mandate to invest in all stages and industry sectors, including information technology, life sciences, and clean-tech. Launched in late 2010, the firm currently manages a portfolio of 13 companies. The firm is actively making new investments and expects to continue to make approximately one new investment per month.
“As venture capitalists over the past 14 years, and entrepreneurs prior to that, we observed how counter-productive the fundraising process often was for both entrepreneurs and their lead investors,” said David Coats, a Managing Director and founder of Correlation Ventures. “After one or two lead VC investors were already actively involved, our companies often wanted a professional, reliable venture investor who would make a rapid investment decision, with minimal distraction, and not, in fact, introduce a new decision-maker into the mix. We founded Correlation to meet this unmet need.”
Trevor Kienzle, co-founder and Managing Director, and also a 14 year venture capital veteran, added, “Several of my best investments as a VC have been in companies that at one point had a need to fill out a round, and turned out to be very successful enterprises. We’re excited about the traction we’re already seeing in our initial portfolio at Correlation, and look forward to offering this alternative to many more companies and syndicates in the coming years.”
Correlation offers management teams and lead investors investment decisions within two weeks without repeating classic due diligence. The firm simply needs a handful of readily-available documents. Correlation is highly flexible on investment size, with investments ranging from $250K to $4M over the life of the company. As a co-investor, Correlation requires at least one other venture firm to also be making its first investment in the round when Correlation does, and the firm does not take board seats. Correlation intends to follow the lead VC investor pro-rata in subsequent rounds until reaching a reserve cap, which it states upfront.
In order to offer this option, Correlation Ventures has pioneered the use of predictive analytics in the venture capital industry. The firm has invested over five years building and analyzing one of the world’s most complete databases of venture capital financings and outcomes, covering nearly all U.S. venture investments over the last 20 years. The firm employed this information to derive an analytical model that is used to inform its co-investment decisions.
Anu Pathria, Ph.D., who leads Correlation’s analytics area, has over 20 years of experience successfully developing and deploying commercial applications enabled by predictive analytics. While at HNC Software, for example, Dr. Pathria co-invented the Falcon fraud detection system, a product that fueled HNC’s IPO and currently protects approximately 65% of world-wide credit card transactions in real time. Grace Chui-Miller, Correlation’s CFO, was formerly CFO at DCM, a large Bay Area-based venture capital firm.
Correlation is advised by senior VCs and leading economists who specialize in private equity, including Dr. Steven Neil Kaplan, Ph.D., at the University of Chicago and Matthew Rhodes-Kropf, Ph.D., at the Harvard Graduate School of Business Administration.
ABOUT CORRELATION VENTURES
Correlation Ventures, a $165M venture capital fund, leverages world-class analytics to offer entrepreneurs and other venture capitalists a dramatically better option when they are seeking additional co-investment capital to complete a financing round. The firm makes investment decisions in two weeks or less and offers reliability and transparency about reserves and its intentions to follow in future financings. Correlation Ventures invests across all industry segments, U.S. geographies and investment stages—from seed through late stage. Correlation Ventures has offices in San Diego and Palo Alto, California. For more information, visit http://www.correlationvc.com.-