NORTH ADAMS, Mass. – Just months after closing shop, the former chief executive of now-defunct e-tailer MotherNature.com is returning to his venture capital roots. Michael Barach has joined Village Ventures Inc. as a managing director of capital investment.
Barach joined Bessemer Venture Partners in 1990. He became a partner at the Wellesley Hills, Mass.-based firm in 1994, and then departed for MotherNature.com in 1998. Barach will take on a part-time advisory role to Village Ventures’ Pioneer Valley Fund.
The Pioneer Valley Fund – spanning from Northampton, Mass. to Amherst, Mass. – is expected to close at the end of the first quarter with approximately $20 million under management. Already, Banknorth Group Inc. of Portland, Maine has said it would commit $7 million across Village Ventures’ five New England funds. The remainder is expected to come from both institutional investors active in the region, including Williamstown, Mass.’s Berkshires Capital Investors and Williams College, and Rho Management of New York, as well as high-net-worth individuals. Village Ventures, a management company, will invest up to $5 million in the fund.
Alongside fund manager Tripp Peake, Barach will raise funds, source deals and approve investments. Together, they will target early-stage technology companies with investments in regional broadband and telecommunications firms and companies with defensible intellectual property. Both, said Barach, are long-term opportunities whose gentle growth curves make viable acquisition targets.
“It’s a good way to play secondary markets,” he said. “There’s a longer ramp – it’s a longer term, slower growth play.”
Already, the fund is said to be in talks with a team of university-based computer scientists working on algorithms. While the fund will limit the size of its investments to under $5 million, Village Ventures and its financial partners – Bain Capital, Highland Capital Partners and Sandler Capital Management – may also invest alongside the fund and later have proprietary access to second and third rounds of funding.
Last June, Bain Capital, Highland Capital Partners and Sandler Capital Management seeded Village Ventures with $80 million to launch its network of technology-focused regional funds. To date, the firm has launched nine funds. While Village Ventures invests in each of the funds and may take a majority stake in the most promising of portfolio companies, it is primarily an operating company providing back-office support, fund raising and identifying untapped markets for investment.
Barach, on the other hand, will lend expertise in telecommunications, retail and e-commerce to the fund. At Bessemer, he led a $2 million buyout deal for International Pacific Holdings Inc., a provider of long distance phone services. Two years later, when telephone giant WorldCom Inc. bought the company, Bessemer earned three times what they put in. Barach also led investments and sat on the boards of Eyeonics Corp., a developer of electronic eyewear and now-defunct online retailer Furniture.com Inc. before taking the helm at MotherNature.com. There, he raised $113 million in three rounds of financing.
Before joining Bessemer, Barach held several management positions with a number of retail outfits. He graduated from Amherst College and received a J.D. from Harvard Law School and a M.B.A. from Harvard Business School.