New York angel investor Roger Ehrenberg is raising up to $25 million for a venture capital fund focused on startups in the “big data” space, providing cutting-edge database architecture, predictive analysis and high-performance computing.
Ehrenberg says that the firm, called IA Venture Strategies, is expected to hold a final close within the next two months.
IA Venture already has held a first close of an undisclosed amount, and Ehrenberg says he is close to finalizing the firm’s first investment, a stealth-mode predictive analytics company in Boston. He adds that about two-thirds of IA Venture’s investments will be in the Washington, D.C.-Boston corridor, but that he also expects to be active on the West Coast, Israel and the United Kingdom.
At first blush, this is a surprising development. Ehrenberg has long said that the traditional VC fund model is broken.
So is this an about-face for a long-time angel investor?
“No,” says Ehrenberg, who points out several structural differences between IA Venture and typical VC funds.
First, he says, he is not seeking capital from traditional VC funding sources, such as pension funds and endowments. Instead, he’s raising money from individual investors who either are within the big data space, or those who could help make valuable introductions to IA Venture portfolio companies.
In addition, Ehrenberg says, the fund size is small enough that he and his two cohorts will be carry-driven, rather than fee-driven.
These opportunities didn’t feel like angel [investments] to me. They felt more strategic, and I wanted to play a bigger role in these companies and help them build their own product roadmaps.
Finally, IA Venture is designed to be a “real” venture capital firm, he says, and will not dabble in growth equity or PIPEs. He says the focus of the firm will be on seed stage and early stage investments of between $250,000 and $750,000, for science-heavy startups.
Ehrenberg’s previous interest in big data startups dates back to August 2008 when he began incubating a company called Kinetic Trading Strategies, which he describes as being at “the intersection of quantitative trading and machine learning.”
After launching Kinetic Trading, Ehrenberg says he began receiving pitches for related efforts and a light bulb went off in his head.
“These opportunities didn’t feel like angel [investments] to me,” Ehrenberg says. “They felt more strategic, and I wanted to play a bigger role in these companies and help them build their own product roadmaps.”
He says IA Venture portfolio companies will not be rolled into the Kinetic Trading platform, but are expected to benefit from that group’s working scientists.
Besides Ehrenberg, the IA Venture team includes Brad Gillespie, a former employee of Lockheed Martin and Microsoft, and Ben Siscovick, a recent Columbia University MBA graduate.
In 2007, Ehrenberg formed IA Capital Partners to hold his personal angel investments, which have primarily focused on financial technology and digital media. Among the more than 30 active investments in his portfolio, according to his website, are AdCopy, Bit.ly, Covestor, Mimeo.com, oneforty, Recognia, TheLadders.com, TweetDeck and Zoomino. —Dan Primack