PITTSBURGH – Departing from the traditional corporate venture investment model, Boston-based Internet portal Lycos Inc. has teamed with Triangle Capital Corp. to raise a venture fund that will invest in Internet-related companies.
Unlike other corporate investors such as Comcast Corp., Oracle Corp. and E*Trade Group Inc., which have created in-house venture capital units to enhance research and development, Lycos has invested $10 million in a vehicle alongside an outside group of strategic limited partners. It will be managed by a newly created entity, Lycos Triangle Ventures.
The new fund, based in Pittsburgh, allows Lycos to reap the early technological rewards that the new vehicle will provide – and at a significantly lower cost than in-house research and development.
“We think there’s a lot of benefits to our portfolio partners by structuring it this way,” said Dennis Ciccone, managing director of the fund. Portfolio companies stand to benefit from access to distribution channels offered by the Lycos Network, and a host of strategic investors offer a wider variety of expertise than the traditional sole corporate VC.
Apart from Lycos, other investors in the fund include venture backers such as Paul Allen’s Vulcan Ventures, Mellon Ventures Inc., PNC Bancorp, National City Ventures, investment bank Bear, Stearns & Co. Inc., Asian conglomerates Mirae Corp. and Sumitomo Corp., which manage Lycos’ portals in Korea and Japan, respectively. The fund at press time had raised about $70 million, and was finalizing details with one more investor. Lycos Ventures has a $75 million cap.
Lycos was an active venture investor prior to creating Lycos Ventures – its 11-company portfolio includes two recent initial public offerings, free e-mail provider Mail.com Inc. and on-line investment bank Wit Capital Group Inc.
The fund will focus on Internet technology, content and e-commerce deals ranging between $1 million and $4 million. Lycos has not closed any deals as yet, but had three pending, said Triangle President Jay Katarincic.
Ciccone and Katarincic, Triangle founder Don Jones, Mike Stubler, who joined the firm at the launch of the new fund, and Jay Hart, a former Lycos business development executive, will manage Lycos Triangle Ventures.