Like a Seedling Sprouting from the Scorched Earth, Another Early-Stage Venture Firm Emerges: Step5 Ventures

Okay, so it’s an overwrought headline, but the fact is that while venture firms across Silicon Valley continue to quietly implode, the number of ambitious entrepreneurs trying to create new venture capital firms continues to grow. I’ve already reported on a handful of new outfits in recent months, including Freestyle Capital, K9 Ventures, and Quest Venture Partners.

In another couple of weeks, you’ll be hearing more details about yet another new firm: Step5 Ventures. The firm is being managed by Noah Doyle, a UC Berkeley grad who cofounded the bubble-era loyalty network startup MyPoints (acquired by UAL Corp. for $112 million in 2001) before becoming director of sales and market development at the digital mapping startup Keyhole, acquired by Google for an undisclosed amount in 2004.

Doyle went on to manage Google’s geospatial products for several years, according to his LinkedIn profile. He then cofounded LSC Ventures, an Oakland, Calif.-based consultancy that offers management and operational guidance to companies “of all stages and sizes,” as it advertises.

Now, Doyle is jumping into the investing game with both feet, having recently closed a yet-to-be announced early-stage fund with an East Coast venture capitalist who himself has cofounded numerous companies. (My guess is the VC has yet to formally leave his firm, as Doyle and I were scheduled to speak and he has since delayed that chat).

A source says that Doyle’s partner was once an highly successful entrepreneur in the “Web meets real estate space.”

No doubt having some traditional venture experience on the team will be meaningful, though increasingly, LPs say they are open to overlooking experience at traditional VC outfits as long as the entrepreneurs involved have a track record of success, as well as have weathered some economic cycles.

“If you haven’t been through up and down and sideways cycles, you don’t have the full experience [needed to be a good investor],” Lisa Edgar, a managing director at San Francisco-based fund of funds Paul Capital, said to me recently. “Can you get that as an entrepreneur? I don’t know for certain, but I know that you have to be hands-on and add value and that means having networks and contacts and ideas about business models.”