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BlueRun Comes Up Short

Early stage venture firm BlueRun Ventures and Finnish cell phone maker Nokia Inc. have a lot in common, so it’s difficult to not associate the two.

After all, BlueRun was launched 11 years ago as Nokia Venture Partners with Nokia as its sole limited partner.

But over the years, BlueRun has shed much of its Nokia ties. Five years ago, for example, BlueRun adopted its current name after Nokia launched a growth fund called Nokia Growth Partners.

Still, the ties remain. The Nokia growth fund, which manages $200 million in assets, continues to share offices with BlueRun in Menlo Park, Calif. And Nokia remains a significant LP in BlueRun, which last month closed its fourth fund with $240 million in capital commitments.

The firm targeted the fund at $300 million, after having raised $315 million for its third fund in 2005. BlueRun Partner Peter Buhl says the fund fell short of its target because of the economic slowdown and because LPs are more focused on capital efficient investments.

Still, Buhl says that all of the LPs from its previous fund, including Nokia, returned for fund IV. He declined to disclose LP names, but one is the California State Teachers’ Retirement System, which commited $35 million to the new fund, according to CalSTRS. Other LPs in past BlueRun funds include BMC Software, CDBWebTech, and Goldman Sachs Group, according to Thomson Reuters (publisher of VCJ).

Fund IV, which held a first close in January 2008, has already invested in six companies. Among its recent investments, BlueRun participated in a $20 million round for PPLive, a Chinese provider of live video feeds and other online video broadcasting services. (Draper Fisher Jurvetson and DragonVenture also participated in the round.)

BlueRun typically invests in Internet and media, mobile, enterprise software, semiconductors and components, but it has also made a couple of investments that can be categorized in the cleantech space, including Deeya Energy Inc., which makes energy storage devices. Since 2006, Deeya has raised more than $55 million from BlueRun, DFJ, New Enterprise Associates, Technology Partners and Element Partners. (BlueRun invested in Deeya from fund III.)

BlueRun’s third fund has made 20 investments to date, according to Thomson Reuters, with the largest number (seven) in the semiconductor/electronics sector. It also invested in five software developers, four Internet-related startups, two industrial/energy companies, one communications startup and one computer hardware company. Of the 20 companies in the fund III portfolio, 16 are active investments, three have been acquired and one has gone out of business (SunRocket Inc., an Internet telephony provider that had raised about $79 million).

The three companies that were acquired are Apogee Photonics Inc., an optical networking company, Cerebra Inc., a maker of semantic integration solutions, and Ugenie Inc., a book discovery engine. All were purchased for undisclosed amounts.

About half of BlueRun’s worldwide investments are international in scope, with the other half of its deals being made in the United States. Over the last couple of years, BlueRun has reduced its emphasis on Europe (including Finland, where Nokia is based) and on Israel, where it closed an office last year. At the same time, BlueRun has increased its emphasis on the Far East. It already has investment teams in Beijing, Shanghai and Seoul, and it is looking to hire two more people to be based either in China or India.

“We are looking at possible expansion in Asia, especially in China, which accounts for about half of our international investment activity,” Buhl says.

PROFILE: BlueRun Ventures

www.brv.com

Locations: Menlo Park, Calif.; Shanghai; Beijing; and Seoul.

Founded: 1998

We are looking at possible expansion in Asia, especially in China, which accounts for about half of our international investment activity.

Peter Buhl

Team: Partners Vineet Buch, Peter Buhl, Andrew Chen, Jonathan Ebinger, Antti Kokkinen, John Malloy, Jui Tan and Kwan Yoon.

Focus: Invests in early stage technology in Internet and media, mobile, enterprise software, semiconductors and components.

New fund: BlueRun Ventures IV, launched in 2007, closed with $240M.

Previous fund: BlueRun Ventures III closed in 2005 with $315M.

LPs: Known investors from past funds include the California State Teachers’ Retirement System, Nokia Corp., BMC Software, CDBWebTech and Goldman Sachs Group.

Did you know? BlueRun moved away from Nokia in 2004, when the phone maker decided to launch a growth fund.

Source: Thomson Reuters and VCJ research

DEALWATCH: Five recent investments by BlueRun Ventures

Arcadia Entertainment Inc._Provides online game server solution.

Atrua Technologies Inc._Develops intelligent touch controls.

Deeya Energy Inc._Provides energy storage devices.

Fangjia_Operates as an online real estate information site.

Muzicall Ltd._Provides ringback tone services to mobile operators.

Note: Investments made from September 2008 and May 2009.

Source: Thomson Reuters