In November 2007, Salman Ullah, Sean Dempsey, and Peter Hsing came together to form Merus Capital, a venture capital firm that wanted to raise $125 million for its first fund. Given the founders’ backgrounds, it didn’t seem overly ambitious. Ullah had been Google’s VP of corporate development, where he worked with Dempsey, and Hsing was coming from Microsoft, where he had been a general manager of corporate strategy.
But like many firms trying to pool capital in today’s inhospitable fundraising environment, Merus is assembling a much smaller fund — and at a much slower rate — than expected. Indeed, according to a May SEC filing that I stumbled across tonight, the Palo Alto-based has raised just $36 million so far and has amended its filing so that it might continue its fundraising indefinitely.
That’s hardly a terrible start, considering that Ullah, Dempsey, and Hsing don’t have traditional VC experience or track records, criteria that, even in flusher times, many institutional LPs still view as important.
In fact, it looks like the firm is finding some success with individual investors and family offices instead, including the J.F. Shea family and the Freidenrich Family Partnership. (A number of other new funds have taken the same path, including Javelin Ventures in San Francisco, started by ex-Googler Noah Doyle and Jed Katz, formerly of DFJ Gotham. The two, who I introduced to readers late last month, are managing $70 million from one family office, possibly that of a certain hedge fund billionaire, if whispers in my ear are right.)
In the meantime, Merus doesn’t seem to be waiting for a final close. The firm, which seems mostly focused on Web-based software and services, has already backed five companies. They are:
- Adroll, an online advertising startup in San Francisco that has raised $4 million thus far, including from Accel, Maples Investments and angels Peter Thiel and Bob Pittman;
- Austin-based Debix, an ID-theft prevention service that has raised $9.3 million, including from Austin-based Trellis Partners;
- Chai Labs, a stealth mode company comprised of early employees from MIT, Stanford, Google, and Cisco (its funding has yet to be disclosed);
- Airline Intelligence Systems, a Kirkland, Washington company whose airline resource scheduling software attracted $5 million from Merus early last year; and
- Device VM, a virtualization technology startup whose technology allows users to access their computer applications more quickly and that has raised $35.5 million from Merus along with New Enterprise Associates, Storm Ventures, DFJ Dragon, and numerous other firms.