Fund Granite’s Fund Hardens Identity

Granite Ventures further solidified its independence last week as it closed a new fund with $350 million in capital commitments from a diverse group of investors.

The San Francisco-based firm was launched in 1992 as an early stage venture capital group within Hambrecht & Quist, in part to continue managing H&Q’s corporate VC partnerships with Adobe Systems Inc. and Texas Instruments Inc. (TI).

The firm spun out in 1998 and changed its name to Granite Ventures in 2000, but continued to manage stand-alone corporate capital pools. For example, the name change announcement was accompanied by news that Adobe and TI had committed an additional $100 million and $30 million, respectively. Granite did manage to raise $150 million for its own fund in 2001, but without any significant representation from the endowment, pension or foundation communities.

The new $350 million fund, however, is packed with such players, plus a traditional limited partner commitment from TI. Granite will continue to manage the legacy Adobe and TI portfolios, but is now also focused on its own deals in the early stage software and communications sectors.

The firm has invested in some 80 companies, including Siebel Systems, Tumbleweed Communications and DigitalThink, among others.

“We’ve been around for 13 years, but really weren’t known in the institutional investor community,” says Len Rand, a managing director with Granite since May 2002. “We had to work very hard to get meetings, but getting [commitments] was much easier than we expected once we got in the door.”

The firm has not disclosed LP names, although public documents identify both Paul Capital and the Teachers’ Retirement System of Illinois as participants.

Current Granite managing directors include Chris Hollenbeck, Sam Kingsland, Standish O’Grady, Rand and Eric Zimits. Firm co-founder Gene Eidenberg, 65, has transitioned into a part-time advisory role, while former Managing Director Rupen Dolasia has decided to leave to pursue other opportunities.