El Dorado Patriarch Passes the Torch

Before he passed the torch to the next generation, El Dorado Ventures co-founder Gary Kalbach had one last item to cross off his to-do list – close his firm’s latest fund. That’s what he did last week, as El Dorado, a nearly 20-year-old firm that has invested in such companies as Earthlink Inc. and Novellus Systems, announced the close of its seventh fund with $200 million in commitments.

The firm also announced that Kalbach will stop making new investments and has taken the title of founding partner of the Menlo Park, Calif.-based firm. Kalbach, 63, helped start El Dorado in 1986 after serving as the lone general partner of West Coast Venture Capital, where his investments included Sun Microsystems, among others.

Scott Irwin, 30, was named El Dorado’s new general partner, alongside Shanda Bahles, Charles Beeler and Tom Peterson. Irwin joined El Dorado in 2000 as an associate and previously served with Accenture, where he developed enterprise software products targeting the energy industry. He sits on the boards of GetActive and Skytide.

The issue of succession planning has moved to the front burner for many firms, as established venture investors begin to step back from their investing duties.

Among those firms that have undergone roster changes as older GPs pass the baton to the younger players include Institutional Venture Partners, Battery Ventures, Charles River Ventures and New Enterprise Associates.

But El Dorado said that Kalbach was declining interviews and would not comment on what other plans he might have. Irwin was also reticent about discussing his ascension at the firm. But in a prepared release, Bahles said that Irwin’s promotion and Kalbach’s decision to step back from active investing represented a successful generational transition for El Dorado Ventures.

“Peterson and I have been investing together for 18 years,” she said. “Beeler and Irwin have worked with us for more than five years. We’re cycle-tested and one of the more experienced teams in early stage investing.”

Irwin says that fund VII will retain its investment focus on seed- and early stage companies in California and the West Coast. He says that the firm has taken an increasingly active interest in on-demand software, personalized digital media and “technology neglected industries,” such as for-profit and vocational education companies and automobile financing companies.

The firm expects to invest in 20 companies over the next three years in semiconductors, software and services, communications and related companies.

J.P. Morgan and Liberty Mutual each have contributed at least 10%, or $20 million, to the new fund, according to a document filed with the Securities and Exchange Commission. The fund has 23 investors and only added two new limited partners. El Dorado says its aim was not to market very much beyond its existing LPs.

Past limited partners in El Dorado include the AT&T Investment Management Corp., Iowa Public Employees Retirement System, National Bancorp of Alaska (now Wells Fargo Bank Alaska), Novartis, Technology Funding and the Wisconsin State Investment Board, according to Thomson Venture Economics (publisher of PE Week).

The firm is named after El Dorado, an imaginary place of wealth and opportunity; sought in South America by 16th-century explorers. The firm counts among its successes early investments in EarthLink (which launched an IPO in 1997) and Novellus, one of its first investments, which went public in 1988.

The firm’s previous fund closed in 2000 with $250 million in commitments.

Email Matthew.Sheahan@thomson.com