Chevron Powers Up $100M CTVII Fund

Although internal venture capital activities may seem to be but a blip on Chevron Corp.?s radar as it prepares for a proposed $100 billion merger with Texaco Inc., the energy giant nonetheless found time last week to unveil a brand new investment vehicle.

Named Chevron Technology Ventures II (CTV II), the fund received a $100 million commitment which will be used to invest in early-stage technology companies that are viewed as able to both produce strong fiscal returns and prove a valuable strategic fit with existing Chevron businesses.

“We?re focusing the new fund on stuff that supports the intersection of where physical things come together with information things, like software that enables the networking of sensors, or machine/human interfacing,” said Cliff Detz, a venture executive with Chevron who, along with Don Riley, will manage CTV II. The pair also managed the energy giant?s previous investment fund, the $60 million CTV I, formed in June of 1999. That fund is fully committed to nine portfolio companies, including Frictionless Commerce Inc., PetroCosm and Xenogen Corp.

Detz said it was unlikely that the new vehicle would deviate much from its predecessor in terms of deal size, with average initial investments falling between $1 million to $5 million and overall life-cycle investments creeping up to as much as $6 million to $8 million.

Also similar will be the fund?s investment process, with Detz and Riley bringing their recommendations to a committee made up of Chevron?s vice president of technology, corporate controller and general manager for mergers and acquisitions.

“We?re inside Chevron but we act more like an external VC,” Detz said. “When we designed CTV, we wanted to avoid the lengthy internal capital approval process which slows down a lot of other firms. So we get a closed-end fund from Chevron, but the decision-making process is extremely quick? we can get [the investment committee] together fairly fast.”

Detz declined to comment on whether the merger would have any impact on either Chevron or Texaco?s respective private equity investment practices. That said, the very fact that Chevron committed $100 million just months before the merger is expected to be enacted likely indicates plans for continued support of CTV.

Contact Dan Primack.