Brian Jacobs says he learned the value of working in a small firm when he started as one of four partners with St. Paul Venture Capital. Since the economy surged and crashed, he’s become more confident that a smaller ship can better weather the storm.
“I believe that over the next decade smaller funds will do better than bigger organizations, who have to make bigger adjustments to the current environment,” he says.
And so Jacobs has gone out on his own and launched Emergence Capital Partners. Jacobs, the founder and general partner of the Burlingame, Calif.-based firm, is joined by former U.S. Venture Partners investor Jason Green and Gordon Ritter, founder of Whistle Communications and Tribe Computer Works.
“As the industry has changed, I’ve started to appreciate the collaborative environment of a smaller fund. A small team working together is more satisfying than a multi-office national organization,” Jacobs says. “We saw that as the economy and the stock market corrected, those companies that had maintained discipline and control over their expenses were generally the survivors. I think we’ll see a similar thing in the venture business.”
Jacobs is the latest in a recent trend of St. Paul investors to go. Former St. Paul managing general partner Pat Hopf founded Symmetry Growth Capital last September while former partner Nancy Olson founded St. Paul affiliate Fog City Fund.
Emergence capital expects to close on a $100 million fund within six to 12 months. “It’s a horrible fund-raising environment, but we think that’s going to work to our advantage,” says Jacobs. “There aren’t too many people who can raise a fund in this environment, but we think we can. We’re engaged with potential limited partners, and there seems to be a high level of interest. We’ve been pleasantly surprised. “
So far the firm has done a few deals with money out of their own pockets, including buying secondary stock of SalesForce.com from a former company employee. SalesForce.com provides services via the web for the sales industry. Emergence also invested in HireRight, a company Jacobs funded when he was with St. Paul. HireRight operates a business-to-business online recruiting portal.
Emergence Capital Partners expects to invest between $5 million and $6 million in technology-enabled service providers. “The service business model is something that many VCs avoid. But we have a particular interest in service companies that can scale sufficiently through the use of technology leverage,” says Jacobs.
Email Matt Sheahan