SAN FRANCISCO – Looking to fill a marketplace void for seed-stage micro-investments, Starter Fluid Management LLC held a first close in mid-May on $31 million for it’s first-time vehicle, the $30 million-targeted, Starter Fluid Fund, said Robert von Goeben, founder and managing director. The fund, launched at the end of February, expected to hold a small second close to accommodate some of its limited partners by the end of June, von Goeben added, noting the fund will likely remaining under $35 million.
Starter Fluid is targeting seed-stage Internet products and services companies. The new firm will focus most of its energies on companies located in and around San Francisco, von Goeben said. He anticipated the fund backing between 20 and 30 companies, with a typical deal size of approximately $1 million.
“Traditional venture capitalists are great at what they do, but they don’t really serve this market anymore. Now, most VCs are looking for bigger, more developed companies, so entrepreneurs are looking for institutional players in their seed rounds,” von Goeben said. “We want to be the exclusive player in this space.” He said he did not anticipate any animosity from the angel investing community. “The rounds we do are very cooperative. We will invest alongside angels and quite a few actually invested in us,” he added.
Fund raising for the vehicle went much faster than expected, von Goeben said. “I was surprised by the response. Everyone seemed to like the concept.” Starter Fluid’s investors include Compaq Computer Corp., FLAG Venture Management’s Next Generation Partners III, Searle Trusts, The University of Chicago, The William H. Miner Foundation and twenty individuals from the high-tech community. He would not reveal how much the firm had invested in the fund. He also declined to disclose Starter Fluid’s management fee and carried interest structure.
Von Goeben is no stranger to the venture world, as he was one of the first directors of Redleaf Venture Management in 1996. He is also one of the authors of The VC, a comic strip which had a limited run in Upside Magazine from 1997 to 1999, lampooning the world of Silicon Valley venture capital. The comic strip has also been published in a compilation book.
Von Goeben said his new firm should have the advantage of being the first mover in its market space. He believes Starter Fluid will blossom into an established franchise for seed investing. Spencer Weisbroth, a media attorney who has been in private practice for the last six years, rounds out the firm’s management team as director of venture operations. Von Goeben said the fund will definitely hire some more investment professionals in the future, though he has no timetable for when this will occur.