Fund Briefs, January 2010

5AM Ventures Beats Target for Third Fund

Life sciences investor 5AM Venture Management has raised $200 million for its third fund, about $50 million more than its target stated in a July regulatory filing.

The firm, which has offices in Menlo Park, Calif., and Waltham, Mass., raised $150 million for its previous fund, which closed in 2006.

As part of the recent fund close, the firm has added Jenny Lee as vice president of finance. She previously was CFO for Global Catalyst Partners.

5AM launched in 2002 to focus on early stage life sciences companies. The firm lists its managing partners as John Diekman, Scott Rocklage and Andy Schwab.

Among 5AM’s 27 investments are Lexington, Mass.-based Pulmatrix Inc.; Cambridge, Mass.-based Semprus BioSciences Corp.; and Santa Clara, Calif.-based Relypsa Inc.

RPM Ventures Raises $60M

Seed and early stage investor RPM Ventures has closed its second fund with $60 million in capital commitments, six times more than it raised for its debut fund nine years ago.

The Ann Arbor, Mich.-based firm announced that its investors include the Michigan Economic Development Corp.’s 21st Century Investment Fund; Venture Michigan Fund; former Michigan Republican gubernatorial candidate Dick DeVos’ Windquest Group; the Renaissance Venture Capital Fund, run by Ann Arbor investor Chris Rizik; and undisclosed individual venture capitalists in California.

RPM has already made 10 investments from the fund, two of them in Ann Arbor, Mich.-based companies: Arbor Photonics and Quantum Learning Technologies.

The firm plans to make from eight to 10 additional investments in information technology and the physical sciences, particularly concepts spun off from university research.

RPM was launched in 2000 with a $10 million debut fund.

Cottonwood Debuts

El Paso, Texas-based Cottonwood Technology Fund is aiming to raise $25 million for its first fund. The venture firm, which is believed to be the first VC firm based in what is the sixth most populous city in the state, has already secured $8 million in commitments, including an undisclosed amount from an individual investor in the region.

Cottonwood expects to make its first investment during the first quarter. It will focus on technology, bio-medical and manufacturing startups in the Southwestern U.S. El Paso is the home of the University of Texas at El Paso and the Texas Tech University Health Science Center.

The firm was co-founded by Managing Directors David Blivin, formerly with Lighthouse Partners, and Beto Pallares, former executive director of the Regional Center of Innovation and Commercialization.

Founder Collective Launches with $40M

Founder Collective has officially launched with $40 million in capital commitments, hoping to fill what it sees as a hole in the market for seed investments.

Founder Collective, which has offices in Cambridge, Mass., and New York, operates as a collective of founders.

Managing Partner Eric Paley says the firm raised the fund from about 20 undisclosed investors, including entrepreneurs, family offices and institutional funds of funds.

Paley notes that the firm used its partners’ personal investment track records as a selling point to investors. In the last six years, they invested more than $20 million in 31 startups, yielding an IRR of greater than 75%, the majority of which is realized, he says.

“We felt there was a gap in the market for a fund sized for seed stage investing,” Paley says.

Paley and David Frankel are the firm’s two full-time managing partners.

Azure Aims for $250M

Azure Capital Partners, which pulled back and made no new investments between February 2008 and May 2009, is seeking to raise $250 million for its third fund, according to a regulatory filing.

The firm wouldn’t disclose its fund-raising or deal activity, but since the investment drought ended, Azure has invested in BlogHer, a woman’s blogging network, and SlideRocket, an online presentation tool that integrates with CRM systems. A third investment was expected to be announced soon.

General Partner Mike Kwatinetz says Azure did not stop looking at deals when it ceased making new investments. The partners held back because the valuations on the companies they saw were too “frothy,” and they couldn’t reach agreements with the entrepreneurs, he says.

Abraaj Acquires Jordanian VC Firm

Dubai-based private equity firm Abraaj Capital agreed in late November to acquire all of Riyada Ventures as it moves into the venture capital space.

Riyada Ventures is a Jordan-based VC firm, with an office in Cairo. It focuses on the Middle East and North Africa, or MENA region. No financial terms were disclosed.

Riyada Ventures, which was set up in the Jordanian capital, Amman, in 2005, boasts a track record of making more than 25 regional and international venture capital investments. Founder and CEO Khaldoon Tabaza has worked in the MENA venture industry since 2000, prior to which he launched several entrepreneurial ventures. In 2006, the World Economic Forum named him a Young Global Leader.

Abraaj will integrate Riyada Ventures into its newly launched regional SME and Entrepreneurship initiative. Tabaza will continue as the CEO of the new business line of Abraaj.