Local VCs raising money for new fund, report says

SUPERIOR – A well-known group of Boulder area venture capitalists is starting a new fund, but none of the principals are talking.

The group, reports say, is made up of directors and principals currently with Mobius Venture Capital, a venture firm based in Silicon Valley and Superior.

According to a DowJones VentureWire story dated Oct. 4, managing directors Brad Feld and Jason Mendelson along with principals Seth Levine, Ryan McIntyre and Chris Wand are raising money to launch a new venture fund, probably here in Colorado.

The VentureWire story said they are trying to raise between $175 million and $200 million, citing “a person familiar with their plans.” An industry blogger who requested anonymity, however, thought the fund amount would be smaller.

Feld, in an e-mail, said he could not comment, and Levine and Mendelson said by phone that they would not discuss anything about Mobius or a pending new company.

Heidi Roizen, a Mobius managing director who has not been reported to be involved in the new group, did not return an e-mail.

Mobius began investing in 1996. Early investments included Yahoo/Geocities, ELoan, Verisign and E*Trade. The current fund, Mobius VI, has been invested in more than 60 innovative technology companies. Companies in Mobius’ current portfolio include Infinera, Danger, Ecast, FeedBurner, Impinj, LRN, Perfect Commerce, Perpetual Entertainment, Postini, Quova, Reactrix, SkyPilot Networks, Sling Media, Technorati and deCarta.

According to press reports, venture capital newsletters and venture fund-related blogs, Mobius has been going through hard times during 2006.

The Wall Street Journal reported on Sept. 7 that given some bad Internet and telecom investments, the company has no plans to raise a new fund and some of its staff is relocating from Palo Alto, Calif. to Colorado.

The Journal also indicated that Mobius’ largest limited partner, Japan’s Softbank Corp., is pulling out of U.S. investments. No one from Mobius’ California offices would discuss changes within the firm.

Jim Carroll, a partner with the Boulder office of Faegre & Benson LLP who does not represent anyone from Mobius, said it is standard for venture capitalists to raise money quietly. “It’s the right thing for them to do – not to go on the record,” Carroll said.

During initial public offerings, companies file a Form S-1 registration statement with the Securities and Exchange Commission announcing their intention to raise a certain amount of money.

But there is no standard SEC procedure for private placements, and, “You don’t take out an ad saying ‘Hey, I’m raising money,'” Carroll said. “Venture capitalists are supposed to raise money under the radar and only talk to a limited number of people.”

If the group is raising money, the partners might have filed with the Securities and Exchange Commission or with the states it is doing business in, or it may not have, Carroll said. “There are about 10 different ways to do it, from a securities law compliance perspective, and a number of different flavors of private placement exemptions. Depending on which one you use, you might have some notice filing obligations with the SEC or with states.”

A spokesman with the SEC echoed Carroll’s remarks.

“You can go around and raise money and not necessarily have to file with the SEC,” he said. “It’s a matter that has to be analyzed by someone who knows the law and all the facts.”

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