Good clean fund for Noventi

Noventi, a Menlo Park, Calif.-based cleantech firm, held a second close on its second fund recently and expects to hold a final close by the end of the summer, VCJ has learned.

Noventi Managing Director James Horn declined to comment on the size of the second close. He says tthat fund-raising has been slow, “because a lot of cleantech firms out there are looking for money,” he says.

The firm had raised $30 million for Noventi Fieldstone Ventures as of September, but the backing had come entirely from Sorgenia, an energy division of the Italian industrial conglomerate CIR Group. The firm’s second close includes several other limited partners, according to sources familiar with the firm.

Noventi previously raised $40 million for an IT only fund in 2002.

The firm’s move to cleantech is surprising given Noventi’s successes with early stage tech deals. The IT fund produced a 28% IRR, according to Horn. One of the firm’s biggest hits was Sygate Technologies Inc., a network security startup that raised $35 million in venture funding and was sold to Symantec Corp. for an undisclosed amount in 2005. Noventi held a 10% stake prior to the sale, Horn says.

Fuel not cells

The firm also sold mobile content startup M7 Networks to Motricity; mobile infrastructure startup Teltier Technologies to DynamicSoft; computer reservation system maker Travel Discount to German tourism company TUI; and Bitfone, a developer of mobile device management software, to Hewlett-Packard in a deal that was completed last month.

The firm recently completed its first cleantech deal. It invested alongside Oak Investment Partners in a $3.2 million Series A for Aurora BioFuels, which is developing genetically modified algae to create biodiesel fuel.

“The learning curve to cleantech has been fairly steep, but we’re looking at it from the technology angle, so it’s not fundamentally different from what we did before,” Horn says. “We continue to be encouraged by the number of entrepreneurs moving out of traditional IT and into cleantech. That was one of the early indicators that to us there was something worth pursuing in cleantech.”

Although the switch from information technology has been difficult, Horn seems to be enjoying it. “I’m amazed about how much I’ve learned about photovoltaic cell production or the bioengineering of algae,” he says. “I didn’t think I’d ever be studying these things.” —Alexander Haislip