Costanoa Venture Capital, an early stage investment firm founded in late 2012 with $100 million to manage, enjoyed a quick score by late 2014 when one of its first portfolio companies, Westminster, CO-based Datalogix, drew an acquisition bid from Oracle and shortly sold for a reported $1.2 billion.
With that short track record, Palo Alto, CA-based Costanoa has just closed a new fund of $135 million more to spread around to startups. The venture firm’s target interests haven’t changed—it concentrates on young companies that help consumers and businesses make the shift to cloud-based services and big data analysis.
“We love working with early stage companies,” founder and managing partner Greg Sands says. Costanoa had already started building its next-generation portfolio as financial commitments came in before the second fund’s close.
From this new fund, the venture firm has backed Redwood City, CA-based Alation, which aims to make a company’s data more accessible within its ranks of IT folks, analysts, customers, and administrators; San Francisco-based Bugcrowd, a security startup that crowdsources threat detection for clients; Menlo Park, CA-based Apptimize, which makes tools to update and optimize mobile apps; and San Francisco-based on-demand customer service company Directly.
Costanoa will reserve money from its first fund to continue support for the companies it backed from that fund, Sands says. Those companies include San Jose, CA-based financial management company Intacct, and New York e-mail marketing company Return Path.
The venture firm specializes in seed funding and Series A rounds, and has invested between $500,000 and $6 million in individual startups. But 75 percent of the companies it has backed received $2 million to $5 million, Sands says. That pattern will continue as it invests the second fund, Sands says.
If you’re seeing some geographic patterns among the portfolio companies mentioned, you’re not wrong. Costanoa’s portfolio companies are clustered in the Bay Area, New York, and Boulder, CO. These clusters make it more efficient for Sands, partner Neill Occhiogrosso, and Costanoa investor Bucky Moore to keep in touch with their portfolio companies, Sands says. And, like a lot of VCs these days, they’re a hands-on crew.
“We like to lead, we like to go on boards, we like to be active investors,” Sands says.
In spite of the advantages of proximity, though, Sands says he’s eager to look at startups outside Costanoa’s existing clusters.
“We’re open to entrepreneurs throughout the United States,” Sands says.
