There’s no obvious reason why Mayfield should lose a third of its investors. Or why Adobe should pull out of Granite Ventures after a decade-long investment partnership. Although investment returns are not immediately available, it’s difficult to believe that either firm significantly underperformed the rest of the venture capital market.

Yet when each firm went to raise a new fund, it had problems with its investors. Mayfield backers left after contract disputes over management fees. Granite Ventures’ backers thought the firm was too clubby with the corporate venture funds it managed and feared conflicts of interest. Yet Mayfield still picked up $375 million and Granite got $350 million.

Limited partners are putting more pressure on VCs despite new commitments that topped $6 billion last quarter. Demands are becoming more rigorous, and big funds are considering cutting their venture allotments. TakeCaliforniaState Teachers’ Retirement System (CalSTRS): Its alternative investment experts teamed up with McKinsey Consulting to evaluate the fund’s performance. The recommendation? Cut venture investment to 15 percent, down from 25 percent.

Last Call, Cholesterol

French pharmaceutical startup Cerenis Therapeutics has developed a way to kick cholesterol out of blood vessels. The company recently closed a €25-million ($30.5-million) first round of financing to develop its projects to synthesize natural HDL, or “good cholesterol.” The company got backing from an international consortium of investors: Sofinnova Partners (France), HealthCap (Sweden), Alta Partners (United States), EDF Ventures (U.S.), and NIF Ventures (Japan). Investors are bullish on the technology’s promise of beating heart attacks and strokes.

The Next Detroit

M.R. Rangaswami’s angel investing firm Sand Hill Group focuses on early-stage software startups. He successfully backed enterprise software companies such as Neoforma, which went public in 1999, and CrossWorlds Software, which IBM bought in 2002.

IBM

Q: Is Bangalore the next Silicon Valley?

A: That’s like asking, ‘Is Detroit still a car town?’ There’s nowhere else in the world [other than Silicon Valley] where you can get an attorney and a VC together and fund a startup in 30 days. That won’t change unless the customers shift. That’s possible for some markets such as cell phones. Those markets may shift to Shanghai or Bangalore. But until that happens, people will come to where the customers are, and that’s still the U.S.

Paycheck for Jobster

The fast-growing online recruiting market will be worth $1.5 billion this year, according to Morgan Stanley. To cash in on the trend, startup Jobster, based in Seattle, recently raised $19.5 million in a second round of financing. The company has garnered more than 100 customers, including Google and Cisco, less than a year after launching its first product. It’s a Salesforce.com-like site for corporate recruiters that focuses on referred candidates rather than unsolicited applicants from job boards like Craigslist and Monster.com. Mayfield joined Ignition Partners and Trinity Ventures in the financing. Jobster is also expanding its focus—it recently acquired vertical search engine WorkZoo, which scrapes and indexes listings from major job boards. And vertical search is hot—job sites Simply Hired and Indeed also secured recent funding—but it’s not clear that it can make any money (for more on Jobster see “VC Action: Jobster,” Vol. 2, No. 6, p. 18).

Beating the Baddest

Innovators and investors are scrambling to deliver new chemicals to outpace bugs that beat drugs—infections that mutate and become invincible to old treatments. Cerexa, for example, just got a $50-million initial round of financing, led by Frazier Healthcare Ventures and New Leaf Venture Partners. The company built a compound that looks like it may beat MRSA bacteria, a resistant strain of the common hospital bacteria staphylococcusaureus, which isn’t phased by most antibiotics. The money will go toward clinical trials.

The company built a compound that looks like it may beat MRSA bacteria, a resistant strain of the common hospital bacteria staphylococcusaureus, which isn’t phased by most antibiotics.