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Artis Capital raises VC fund

As many hedge funds collapse under the weight of poor returns, Artis Capital Management, the hedge fund with close ties to Sequoia Capital, is making an even bigger push into venture capital.

The San Francisco-based firm, which has made venture investments directly from its hedge fund, has set up a venture fund. It has raised $43.1 million for the fund, named Artis Private Growth Partners, according to a regulatory filing. (VCJ affiliate publication PE Week first reported that Artis was raising a VC fund on May 26, although the size of the fund was unknown at the time.)

The fund has 49 accredited investors, according to the filing, which was signed by Artis President Stuart Peterson.

Based on the investments that Artis has publicly disclosed in recent years, the venture fund will likely invest in a spectrum of early stage tech companies. Little esle is known about it. The SEC filing says nothing about the fund’s focus, who its investors are or where the investors are located. The venture fund has not set up a website, and Artis’s main website can only be accessed by limited partners.

The Artis hedge fund has about $1.5 billion under management, according to its most recent SEC filing, which was date Sept. 30. It backed six tech startups last year, including auto GPS company Dash Navigation in a $25 million Series B; alcohol-based fuel cell maker Oorja Protonics in a $15 million Series B in March; fabless semiconductor company Open-Silicon in a $10 million Series D, also in March; enterprise software company SchemaLogic in a $12.7 million Series C in July; security service provider Cast Iron Systems in a $16 million Series F in August; and Internet advertising network AdBrite in a $23 million Series C in November.

The firm’s only disclosed investments this year have been in wide-area-network startup Silver Peak Systems, whose $21 million Series D included participation from Dash Navigation, according to Thomson Reuters (publisher of VCJ).

Artis has co-invested several times with Sequoia Capital, most famously in a round for video-sharing service YouTube. Artis collected shares worth $83 million as a result of YouTube’s sale to Google in 2006 for $1.6 billion in stock.

It’s no coincidence that the firms have worked closely. David Lamond, son of Sequoia General Partner Pierre Lamond, is one of Artis’s principals.

Artis and Sequoia have been co-investors for at least the past three years. Both firms were among the half dozen investors that backed Aruba Networks, which develops wireless local area network equipment. Artis set the terms of the company’s $19.3 million Series D financing in September 2005, a round that eventually grew to $30 million in 2006.

In fact, of Artis’ recent investments, Sequoia has participated in all of them, except for Silver Peak Systems.

The relationship has proven lucrative for Artis. Last year, Aruba went public five years after its founding. Earlier this year, 5-year-old Open-Silicon, which had raised $53.7 million from investors, sold to Bahrain-based Unicorn Investment Bank for $250 million. —Constance LoizosDEALWATCH: Five recent investments by Artis Capital Management

AdBrite_Internet advertising network

Cast Iron Systems_Security services

Dash Navigation_Auto GPS

Oorja Protonics_Fuel cells

SchemaLogic_Enterprise software

Note: Investments made between April 2007 and April 2008. Source: VCJ research