HQ Turns to Stone with Two New Funds –

SAN FRANCISCO – Hoping to symbolically distance itself from the West Coast investment bank from which it emerged two years ago, corporate venture fund manager H&Q Venture Associates announced last month that it had effectively discarded its namesake moniker in favor of the more independent-sounding Granite Ventures.

“We’d been talking about the name change for five or six months – especially with the market confusion since Chase acquired H&Q – and we’d batted around a lot of names,” said Managing Director Christopher Hollenback. “We eventually settled on Granite because we’ve got a solid program that’s been around for a while, and we don’t get caught up in the latest fads.”

Not everyone in the private equity market, however, is thrilled with the final decision.

“I’d assume we’d have some issues with that,” said Adam Rasmussen, principal with Granite Capital Partners when apprised of the situation. “We seem to be more focused on later-stage deals, but this could probably cause some sort of misrepresentation on our part or on their part.”

Hollenbeck said that he had no knowledge of the Provo, Utah-based firm, although he did acknowledge that the term “granite” has been appropriated by businesses across a wide spectrum of industries.

“There are a lot of people out there doing a lot of different things [with the Granite name], but I don’t think that there’s anybody right in our cross-hairs,” he explained.

Hollenbeck also stressed that the name change is intended to be strictly semantic and not indicative of a deeper strategic shift. “This is rebranding as opposed to repositioning,” he said.

Supporting such a claim is the fact that Granite also announced last week that it has received a pair of management mandates from its two corporate limited partners, Adobe Systems Inc. and Texas Instruments Inc. Each company acts as the sole LP in their respective funds, with Granite serving as the GP.

Adobe has committed $100 million to form Adobe Ventures IV, while Texas Instruments’ $30 million contribution will go to TI Ventures III.

“Granite is really plugged into that Silicon Valley network,” said Madison Pedigo, manager of TI Ventures. “We both do due diligence on deals, but they focus on the business aspect while also looking at the technology whereas we really have the technology expertise, while also looking at the financials.”

While TI and Adobe have historically co-invested in only approximately 10% of their respective venture deals through Granite, the manager itself has been known to sidle up next to its corporate charges. Rather than maintaining a general fund, however, the firm engages in fund raising among family, friends and partners each time a new offering is on the table. Hollenbeck estimates that, since its creation in 1992 within H&Q, the firm has used this method to plug between $100 million and $150 million into qualifying start-ups.

He also didn’t deny rumors that Granite may soon scrap that system in favor of the more conventional general fund approach, although he also refrained from directly confirming such suspicions.