Exclusive: D.E. Shaw’s VC Unit Will Continue to Do New Tech Deals, Get Out of Health Care

The venture arm of hedge fund D.E. Shaw Group is cutting staff, eliminating its health care practice, but it will continue to make new and follow-on technology investments, Managing Director Alex Wong tells peHUB in an exclusive interview.

Wong will continue to lead the firm’s venture group, along with two senior members of the tech team, Andre Turenne and Michael Banks. The venture group is eliminating positions for an undisclosed number of junior staff members, Wong says, and is also no longer planning to actively pursue health care investments.

The move marks a strategic shift for the group, which in 2008 added a senior member and junior members to the practice to focus on health care. Wong didn’t specify a reason for the shift other than that “we’ve just made a business decision not to make health care investments.”

Tech, however, is another story. The venture group has roughly 15 companies in its portfolio and is not currently investigating a secondary transaction. “We are very satisfied with our portfolio, and there are no plans to sell it,” Wong says.

As we previously reported, Shaw has made investments in at least four companies this year, according to Thomson Reuters (publisher of peHUB). It backed Altierre, which develops wireless pricing technology for retailers; Infinite Power Solutions, a thin film battery producer; Offerpal Media, a provider of offers-based ads for social media; and PGP Corp, an encryption provider.

Shaw has also been the beneficiary of several exits.

In April, Symantec announced it would acquire PGP for $325 million. PGP had previously raised about $45 million in venture funding from D.E. Shaw, Intel Capital, DCM and Venrock.

In May, MEMC Electronic Materials Inc. (NYSE: WFR) agreed to acquire Solaicx Inc., a Santa Clara, Calif.-based maker of silicon wafers for photovoltaic panels, in a deal reported to be valued at up to $103.6 million. Solaicx has raised more than $50 million in VC funding from D.E. Shaw, Applied Ventures, Big Sky Ventures, Firsthand Capital Management, Labrador Ventures and Greenhouse Capital Partners, according to Thomson Reuters.

And Wireless network provider Meru Networks (Nasdaq: MERU) went public on March 31.  D.E. Shaw had a 16% stake in the company at the time of the IPO, according to securities filings.