VC fund briefs, week of June 2, 2008

Craton closes cleantech fund

Craton Equity Partners raised $191.5 million for its first cleantech fund, collecting $40 million from the California Public Employees’ Retirement System.

The firm, formerly known as Paladin Private Equity Partners, started raising its fund in 2006 and secured an initial investment from the CalPERS’ Environmental Technology Program, an initiative the pension fund initiated to support cleantech investing.

Craton backs companies working on alternatives to carbon-intensive technologies currently in use, including green building materials, renewable energy generation and alternative fuels. The firm is also looking to back companies working in water and waste management.

It has invested in two startups so far from the new fund. It backed geothermal energy systems installation company Enlink GeoEnergy Services in a $22.3 million Series A in March and “carbon-neutral” cement company GigaCrete in a $3.5 million Series A in June 2007.

The firm is run by Robert MacDonald, a former co-founder of independent clean energy company Catalyst Energy; Tom Soto, a former president of the Coalition for Clean Air non-profit; Michael Lenard, a former partner with Latham & Watkins; and John Gerson, a former CFO at William E. Simon and Sons Private Equity Partners.

Craton claims, on its website, to be a “triple bottom line” investment firm looking to achieve above market returns, environmental improvement and create jobs and wealth for “diverse communities.” —Alexander Haislip

Hunt Ventures tracks down $140M

Hunt Ventures has closed its first institutional fund with $140 million in capital commitments. The Austin, Texas-based firm was founded in 1998 to invest on behalf of Dallas-based Hunt Consolidated Inc. and company founder Ray Hunt.

The VC firm did not disclose LPs, but it announced that a significant capital commitment came from an unaffiliated institutional investor.

“We are pleased that our strategy of investing in early stage information technology companies has been validated by a sophisticated institutional investor,” said Steve Coffey, managing director, in a prepared release.

Hunt Ventures focuses on early stage wireless, digital media, software and services companies. The early stage firm will use some of the new capital to support existing portfolio companies, and the rest to make new investments.

Charter raises one-third of $150M target

Charter Life Sciences has held a $56.4 million first close for its $150 million-targeted second fund, according to a regulatory filing. Limited partners include Pacific Coast Investors and The Ohio Capital Fund.

Element seeks $400M for fund II

Element Partners, a cleantech VC firm formerly known as DFJ Element, has held a $262 million first close for its second fund, according to a regulatory filing. The firm is seeking upwards of $400 million. Lehman Brothers is serving as placement agent.

Avrio grows first fund to $75M

Calgary, Alberta-based Avrio Ventures has closed its first fund with about $75 million in commitments. The firm’s managers had spun out of FCC Ventures in 2006. Limited partners, according to VentureWire, include AVAC, Export Development Canada, Business Development Bank of Canada and an undisclosed local family office.

The firm focuses on investments in food technology, nutraceuticals and industrial bioproducts. Avrio, which also has offices in Toronto and Montreal, plans to invest in between 12 and 14 companies over the next several years. To date, the firm has made three investments from its new fund, including Siamons International Inc., a natural antimicrobial product maker; Origin BioMed Inc., topical nerve-related pain treatment developer; and S.J. Irvine, a maker of gluten-free specialty processed foods.

Avrio Ventures, currently with six investors on staff, may add one to two new members to its team for this fund, according to Partner Aki Georgacacos.

French firm closes life sciences fund

Edmond de Rothschild Investment Partners has raised $235.5 million for BioDiscovery 3, its largest life science fund to date. Investors include main investors La Compagnie Financiere Edmond de Rothschild and La Caisse des Depots. Amgen Inc. has also participated as the only non-European investor. The firm’s second fund closed in 2005 at less than $100 million. Through BioDiscovery 3, the Paris-based firm plans to invest in between 15 to 20 life science companies in Europe, particularly in France and Germany.

Ascent eyes fifth fund

Ascent Venture Partners is planning to soon launch marketing efforts for itrs fifith fund, according to Private Equity Insider. The Boston-based firm raised $140 million for fund IV, which closed in 2003, and which received some backing from the U.S. Small Business Administration. Ascent will reportedly try to raise between $150 million and $200 million for fund IV from institutional investors. Past LPs have included municipal pension funds in Massachusetts.

The ealry stage firm invests in software and networking companies.

GE Venture arm geared up for biofuels

General Electric Co.’s venture arm plans to invest in eight to 10 new deals during the remainder of the year, and is particularly interested in electrification of transportation and biofuel technologies, Ricardo Angel, senior vice president at the venture group, told VentureWire.

Angel said he has spent the past few months focusing his attention on cellulosic ethanol and other next-generation biofuels.

He said he expects to spend the next several months studying the transportation sector. The venture arm, part of GE Energy Financial Services, has an annual budget of between $50 million and $100 million. It has so far made only two investments in 2008, Angel said. Equity deals typically range between $5 million and $20 million.