Update, 4/18/08: Boston Globe columnist Scott Kirsner spoke with Greeley and with IDG’s Pat McGovern and got more background information about the name change and Flybridge’s new direction.
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Local early stage venture capital firm IDG Ventures Boston has a new name and twice as much money to put behind it.
The company announced today that it’s changing its name to Flybridge Capital Partners and that it has closed its third and newest fund with $280 million, bringing the total amount the firm has under management to $560 million.
Located near Boston’s Copley Square, the firm is led by general partners David Aronoff, Jeff Bussgang, Michael Greeley, Chip Hazard, and Jon Karlen. Formed in 2001 as a spinoff of IDG Ventures, the global venture investing wing of IT media giant International Data Group, Flybridge is one of the area’s most active early stage investors, putting its money into Internet media startups and consumer-centric Web 2.0 companies, as well as a handful of life-sciences and mobile-technology companies. The firm’s portfolio includes startups as diverse as T2 Biosystems, a Cambridge, MA, maker of portable, magnetic-resonance-based diagnostic devices; Blackwave, an Acton, MA-based internet video infrastructure company; and GuildCafe, a Cambridge, MA-based social network for online gamers.
The firm’s website formerly referred to IDG as its “flagship limited partner,” but the newest fund has wider group of investors, including (according to a written announcement) the Alfred I. duPont Testamentary Trust, AlpInvest Partners, FLAG Capital Management, Grove Street Advisors, HighVista Strategies, Knightsbridge Advisers, TrueBridge Capital Partners, VenCap International, and “two of the top three Ivy League endowments, one of which is Princeton University.”
On Friday I talked to Flybridge general partner (and Xconomist) Michael Greeley about the firm’s ongoing relationship with IDG, the move toward a broader investor base, the new name, and more. Here’s the text of that interview:
Xconomy: Congratulations on closing your latest fund. How hard was it to pull that together?
Michael Greeley: It happened very quickly. We were oversubscribed, which we think was a nice validation of our strategy, which is to be really focused on innovation and passionate entrepreneurs. We were pleased that our strategy was confirmed by the investors; we lost none of our traditional LPs [limited partners]. We have changed the relationship with IDG, and added a small handful of world-class LPs. But “business as usual” is the headline.
X: Why the name change?
MG: We think it reflects the broadening investor base. It’s part of the natural evolution of the firm. This is our third fund. We brought in outside investors starting with the second fund. IDG was a small investor in the second fund, but have become entrepreneurs in our own right, and this was the next obvious step. The relationship with IDG is still very strong; we have great personal relationships with everyone from [IDG founder and chairman] Pat McGovern to the senior executives in the operating businesses.
X: Was the affiliation with IDG holding you back in some way?
MG: I wouldn’t say it was holding us back. I think that for some people, especially first-time entrepreneurs or people who weren’t really well-conversed in the venture business, they assumed we were focused on just media, or that we were a corporate venture fund. But the name change simply reflects that we now have 12 or 15 word-class investors, and it was appropriate to have a more distinct name.
There was also some brand confusion with the West Coast fund. There is now an IDG Ventures San Francisco, and they have a fundamentally different orientation than ours. This clarifies that.
X: How did you come up the new name, Flybridge? Does it mean something?
MG: If you are a boater, you will know what a flybridge is. It’s the part of the boat up top, the forward part where the captain is often standing. From there, you have the best perspective. You’re looking out over the water and you can identify the shoals and the water and the waves. We thought it was a wonderful analogy with the we way work with entrepreneurs. Branding is such a challenge these days given the number of firms out there, but it turned out that the name and the URL were available. It was our top choice and we were thrilled to get it.
X: In addition to dropping IDG from the name, you’ve dropped Boston. Does that reflect a change in your geographic focus?
MG: As early stage investors, we like to be close to our companies. Probably three-quarters of the portfolio, we can drive to. But we’ve had some wonderful investments on the West Coast and Seattle and the mid-Atlantic. It’s clearly a national footprint, and maybe even international, finally, since a couple of companies [in the portfolio] are U.S.-based but have most of their activity overseas. So, dropping the Boston qualifier doesn’t mean that we don’t like Boston or living in Boston. We love the Boston innovation economy. But it was important for us [that the name] reflect the national orientation.
X: When you say that the new fund was oversubscribed, do you mean you had people offering more money than you could accept, or that you accepted more than you originally intended to?
MG: It actually can mean both. We set out to raise $250 million. We get high marks from our investors for being dogmatic about staying small. We wanted to stay in the mid-$200s. We closed at $280 million to accommodate what was really overwhelming interest. “Oversubscribed” usually means you have more coming in than you mean to take, and we had a number of investors whom we unfortunately did not include in the fund. We wanted fewer investors and we wanted them to be really important to us. We had a lot of interest from smaller investors that couldn’t be accommodated.
X: In your press release about the new fund, you say that you now have two of the three largest Ivy League endowments as investors, and that one of them is Princeton. Is the other one Harvard or is it Yale?
MG: All I can tell you that it’s one or the other. The school is concerned that we’ll market our fund using the fact that they’re involved, so they just have a policy of preferring not to be named.
X: Have there been any personnel changes to go along with the name change or raising the new fund?
MG: One of our principals, John Karlen, was promoted to general partner recently, but that was not because of the fundraising. John is an extraordinary investor who was been with the firm for over two and half years, and it was just an obvious decision to make him a full general partner. Other than that, the investment team is unchanged.
Addendum, 3/17/08, 11:45 am: GPs Greeley, Bussgang, Aronoff, and Hazard are all active bloggers, and the new Flybridge website includes a useful page rounding up their latest posts.
