Costanoa Venture Capital, the latest engagement from storied Sutter Hill Ventures investor Greg Sands, announced its recently raised $100 million fund together with its first 10 investments.
The fund will focus on early stage startups with investments of $500,000 to $3 million, specifically targeting applied big data, social and mobile enterprise solutions, consumer services, and cloud companies, especially those in the mobile space. It will especially seek companies using big data to deliver high quality enterprise services. Its efforts will be targeted on early stage companies, rather than those that have already gained momentum.
“At Costanoa, we are not chasing momentum, but trying to create it,” Sands said. “By identifying and working in sectors before they are saturated, and by undertaking technical projects that require hard work, Costanoa is creating value for its portfolio of companies leading the data revolution.”
So far, Costanoa’s investments include Datalogix, DemandBase, Guardian Analytics, Inflection, Intacct, iSocket, Lex Machina, LinkSmart, Return Path, and Risk I/O. In its press release, the firm explains it wants to play a larger role in the companies it invests in, providing companies with “a combination of ‘right sized’ investments and hands on support from a high-quality institutional partner.”
Sands previously spent 14 years at Sutter Hill Ventures, which will work with Costanoa as a sponsoring limited partner. Serving as managing director, he helped lead investments in Merced Systems, QuinStreet, Feedburner, AllBusiness, Return Path, and Youku. Prior to that, Sands was the first hire as Netscape Communications’ first product manager. He’s also helped manage business development for Cisco.
“Greg has always been an invaluable investment partner and trusted adviser,” said Matt Blumberg, Founder and CEO of Return Path. “In his work with Return Path, he has provided us with the guidance we need, while allowing us the room to operate, improve and ultimately succeed. We are very excited to be working closely with Greg and to be part of the Costanoa family.”
It’s certainly a confusing time to launch a fund, as enterprises are starting to recognize the value of the cloud but are still not sure what to do with it. The market may be excited, but it’s still in an early stage of growth as it balances traditional infrastructure with technological innovation and change. This results in an abundance of services ahead of real demand, which mean a great deal of startups will fizzle and die through the natural process of selection. Costanoa will need to choose its cards wisely to sort the truly innovative from the hype.