Venture Firm Engineering Capital Emerges With $32 Million Fu
Source: Deborah Gage
Ashmeet Sidana, who left the Silicon Valley venture firm Foundation Capital in 2013, has started his own venture firm, called Engineering Capital, and has closed a $32 million fund.
The firm will invest in startups that are focused on what Mr. Sidana describes as “the tsunami of change coming to the infrastructure of computing,” a change in which technologies from big, traditional IT providers such as EMC Corp.EMC +0.92% and Cisco Systems Inc.CSCO +0.03% are being passed over for technologies that can more easily accommodate the huge volumes of data being generated by companies.
“The companies that represent the largest, most well-recognized, best-established technology to the IT ecosystem don’t power the best data centers in the world,” Mr. Sidana said. “Those are run by Google, Amazon, SoftLayer and Facebook.”
Mr. Sidana is a longtime Silicon Valley technologist, with bachelor’s and master’s degrees in computer science and an M.B.A. from the University of Pennsylvania’s Wharton School. After working at Hewlett-Packard Co. and Silicon Graphics, he started a software company, Sidana Systems, in 1995, and then went back to school and worked as a product management director at VMware Inc.VMW +0.13% before going to Foundation Capital in 2004. He left that firm as a general partner. He’s also been an angel investor in enterprise startups including SignalFuse Inc., which is backed by Andreessen Horowitz.
His fund was oversubscribed, he said. He started out raising $25 million but ended up at $32 million and still had to turn money away. His limited partners are a combination of institutional investors: a university endowment, a foundation and a fund-of-funds, as well as individuals including serial entrepreneur and university lecturer Steve Blank, GGV Capital Founding Partner Scott Bonham, Invati Capital founder Mukesh Patel, and Kathryn Gould, one of the industry’s first female venture capitalists. Cedana Capital, which has been investing in new micro-VC funds, is also an investor.
Ms. Gould, who co-founded Foundation Capital, said she mentored Mr. Sidana before she retired in 2005 and was struck by his idea for a new firm, so she helped him with Engineering Capital’s business plan and fundraising.
“He’s clearly focused on infrastructure as a service and big data centers, which I think is a very sizable market, but it’s very technical and not enough people know about it,” said Ms. Gould. She said that she thought Mr. Sidana’s experience as a technologist and an investor would make him successful.
Mr. Blank brings his theory of “lean startups” to Engineering Capital, according to Mr. Sidana. This is the idea that even though companies need less money to start than they used to, they need to be planned carefully from the beginning, both financially and from a product perspective, because they might have to stay independent and private for years.
Companies are taking longer than ever to go public, and for enterprise technology companies in particular, he said, “true learning for those companies comes from one-on-one customer engagement.”
Unlike some other firms that invest in seed rounds, Mr. Sidana said, he will follow his successful companies through until they exit. The firm expects to make 12 to 18 investments out of this fund, leading and anchoring a seed round and starting with $500,000 or $1 million, and then continuing to do pro rata in subsequent rounds.
“The value I want to bring is true technical insight into the market and real hands-on help in building your company,” he said. “Typically my entrepreneurs are executives [who] understand how enterprises work. They’re still pretty young, in their 30s, [but] they have experience and are not kids. They’re not living in a frat house throwing ideas on a wall.”
Mr. Sidana for now is the only investor at Engineering Capital, but said he plans to add another partner in the near future.
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