VentureBeat

Merus Capital, a venture firm founded by former Google and Microsoft executives, is raising $125 million for its debut fund, and has raised $10 million so far, according to an SEC regulatory filing cited by VentureWire. The firm focuses on three areas of investment — algorithm intensive software, online marketplaces and Web-based consumer software and services.

The Palo Alto, Calif, firm was founded last November by Salman Ullah (pictured, left) when he left his position as Google’s vice president of corporate development (a story that VentureBeat’s Eric Eldon broke); Sean Dempsey, who also left Google’s corporate development group; and Peter Hsing, a general manager of corporate strategy at Microsoft. Before leaving Google, Ullah was the public face of its acquisition efforts, heading the purchase of 35 companies since 2004, including YouTube.

Dempsey told VentureWire that in the short-term, Merus’ founders see opportunities in their connections with Google, particularly with Googlers leaving to found their own startups. The firm won’t be investing in any companies that are normally classified as “Web 2.0,” namely companies based around social networking and other social and collaborative tools, Dempsey said.

Limited partners in the new fund include the Freidenrich Family Partnership and Shea Ventures. Merus Capital has already made six investments, including identity theft protection startup Debix and DeviceVM, whose products load your computer faster.