Scoop: Shasta Ventures Readies for Third Fund

Shasta Ventures is reaching out to limited partners in preparation for its third fundraising, peHUB has learned.

Shasta Ventures declined to comment for this story.

Most of Shasta’s prior GPs are expected to participate in the fundraising. One source confirmed to peHUB that both of the California-based VC firm’s first two funds are expecting to generate positive returns.

The California Teachers’ Retirement System (CalSTRS), which is an LP in Shasta’s first two funds, reported on Sept. 30, 2010, that both of those funds had positive internal rates of return. (A more recent report was unavailable.)

CalSTRS committed $21 million to Shasta’s debut fund, of which $17.85 million has been drawn down. It has received distributions totaling $3.98 million and reports that the fund has an IRR of 4.17 since its 2004 inception.

For Shasta Ventures II, CalSTRS committed $22.5 million, of which $9 million has been called down. CalSTRS has not received any cash distributions from Shasta for the vintage 2007 fund, but it reports that fund II has an IRR of 3.34.

There is no word yet about the target for Shasta’s third vehicle, but it was indicated the VC’s next vintage will exceed the $250 million VC fund it raised for fund II and the $210 million it raised for its first fund.

Exits from Shasta’s first two funds include ubiquitous smoothie retailer Jamba Juice, mall dining staple P.F. Chang’s, online retailer Blue Nile and, which was sold to Intuit for a reported $170 million. Earlier this year, it sold its SayNow, a voice messaging system, to Google. According to its website, existing investments include e-commerce company Pixazza, and e-security company WatchDox, among others.

Shasta invests in early-stage companies in Internet services, mobile, software and infrastructure.

The VC firm continues to put existing capital to use in a frothy market. Earlier this month, Shasta led a $5 million A round in task management service TaskRabbit. Other recent deals for the VC include Shasta’s buying into a $25 million round for Spiceworks last month and, also in May, it helped pump $3.6 million into LiquidSpace, a startup that helps link mobile workers with rented workspace.

Already in 2011, successful VCs have turned pre-IPO investor frenzy surrounding companies like LinkedIn, Twitter and Facebook into a catalyst for a monster fundraising year. Last month, Bessemer Venture Partners raised $1.6 billion and Insight Ventures locked down $2 billion for two separate funds. In February, JPMorgan raised $1.2 billion for a social media investment fund. And, last month, IDG teamed with Accel Partners to cobble together a pair of funds totaling $1.3 billion.