Artis pitching a VC fund to investors

Artis Capital Management, the hedge fund with close ties to Sequoia Capital and an investor in YouTube, is shopping to its limited partners the idea of a venture fund to be run by David Lamond, a source tells PE Week.

Details of the fund target or when it might hope to close were not immediately available. Lamond, who has been with Artis since at least 2005, was not immediately available for comment and Artis executive officer Stuart Peterson did not return a call for comment.

Hedge fund managers familiar with Artis’ history of private company investments were unsurprised by the news, but could not corroborate.

The firm may just be testing out its pitch, effectively feeling out its investors for what their interest might be in such a fund, a source says.

Artis has dipped its toe into the private equity market in the last several years as it typically follows investments made by Sequoia Capital. (David Lamond is the son of Sequoia Partner Pierre Lamond.)

Artis invested in six private companies during 2007. It backed auto GPS company Dash Navigation in a $25 million Series B in February; alcohol-based fuel cell maker Oorja Protonics in a $15 million Series B in March; fabless semiconductor company Open-Silicon in a $10 million Series D, also in March; enterprise software company SchemaLogic in a $12.7 million Series C in July; security service provider Cast Iron Systems in a $16 million Series F in August; and Internet advertising network AdBrite in a $23 million Series C in November.

Its investment pace is decidedly slower this year, backing only one company to date. It participated in a $21 million Series D for Silver Peak Systems Inc., a Santa Clara, Calif.-based provider of wide-area-network acceleration technology in January. Silver Peak is not a Sequoia-backed company, according to venture capital data from Thomson Reuters (publisher of PE Week).

It is unclear if Artis will continue investing behind Sequoia, as Sequoia works toward raising its own hedge fund.

Artis runs several investment vehicles that feed into its primary hedge fund, which held more than $1.7 billion in public securities at the end of the first quarter, according to regulatory filings.

The firm recently added one more fund to its coterie: Artis MENA fund. MENA is an acronym typically used as shorthand for the Middle East and North Africa. Its use in the regulatory filing might indicate that the firm is looking to invest in companies located in that region or is looking to collect money from investors from that region.

Artis, however, is one of the few hedge funds that has achieved notable liquidity from exits. The firm collected more than $60 million worth of Google (Nasdaq: GOOG) stock in October 2006 when the Internet search giant bought YouTube for more than $1.6 billion in stock. Artis had participated in the startup’s $11.5 million Series B round in April 2006.

Artis scored again last year with the $88 million IPO of wireless LAN company Aruba Networks (Nasdaq: ARUN) in March 2007. Artis set the terms of the company’s $19.3 million Series D financing in September 2005, a round that eventually grew to $30 million in 2006.