Veteran Emerging Managers On Fundraising Trail

Shasta Ventures has yet to announce any investments, but that hasn’t stopped limited partners from lining up for its inaugural fund. The Menlo Park, Calif.-based firm currently is in allocation mode, and expects to soon hold a final close in excess of its $175 million target capitalization.

If oversubscription for a first-time fund manager doesn’t seem to make much sense, it is worth noting that the principals of Shasta Ventures previously plied their trade as partners of Battery Ventures, Trinity Ventures and New Enterprise Associates.

They are part of a burgeoning group of “venerable emerging managers” who are expected to have a number of fund-raising success stories in 2005.

“There are a few recognizable names out there [in the fund-raising market], but the fresher ones might be from new firms that are carving out a specific niche,” says Greg Turk, director of private equity investments for the Illinois Teachers’ Retirement System.

His group recently committed $25 million to Shasta, joining other LPs such as the California State Teachers’ Retirement System, Paul Capital, Baylor Health Care System, Bell Atlantic Master Trust and Fort Washington Capital Partners.

Union Square

The next venerable emerging manager to close a fund could be Union Square Ventures, which has been in the market with a $125 million-targeted vehicle for nearly nine months. The New York-based firm was launched by Fred Wilson (formerly of Flatiron Partners) and Brad Burnham (formerly of AT&T Ventures). Union Square already has $104.2 million in committed capital from LPs, such as the Los Angeles County Employees’ Retirement Association and the University of Texas Investment Management Co.

IDG Ventures

Also out in market right now are a handful of groups whose partners have worked together for a while, but are operating more independently. The most notable example is IDG Ventures, the corporate venture arm of IT media company International Data Group.

Each of the firm’s five offices traditionally has operated autonomously, with IDG being the sole limited partner in each office’s stand-alone fund. Going forward, however, IDG has announced it will simply serve as a limited partner – albeit a significant one – while the offices go out in search of third-party capital.

The farthest along is IDG Ventures Boston, which hopes to close on $150 million by early in the second quarter.

“We’re going to continue our strategic relationship with IDG, but this is the best way to go about building a real early-stage VC franchise in Boston,” says Chip Hazard, a managing general partner with IDG Boston.

The group traditionally has been organized along geographic lines, with separate fund structures for the Boston, West Coast, European, China and Vietnam offices. IDG Ventures’ West Coast office also is prepping a new fund (and recruiting two new partners), while similar strategies are expected for both the Europe and China offices.

Sightline & Sprout

Another unchained venture group that’s hitting the 2005 fund-raising market is Sightline Partners (formerly Piper Jaffray Ventures health care group).

And Sprout Healthcare Ventures already has $155 million in LP commitments locked up as of a regulatory filing last September.