The venture capital industry has been incredibly volatile recently -- with funds and deal sizes shrinking, and many firms simply running aground, unable to raise new funds at all. But this hasn't deterred Olympus Capital, a brand new venture capital firm launching today with a modest $150 million first fund.
Based on Sand Hill Road in Menlo Park, Calif., the epicenter of the technology VC world, the firm closed its fund late last year and plans to invest in later-stage companies in the green and information technology sectors. It says its average investment will fall between $7 and $15 million.
In line with its peers, Olympus will be scouting for more capital-efficient deals in both sectors. A lot of money is shifting away from companies requiring pricey manufacturing setups -- like solar panel and wind turbine makers -- toward web-based and IT solutions like energy monitoring software.
In somewhat of an exception, one of Olympus' first investments is Solexant, a company looking to commercialize highly efficient, printable solar cells (much like Innovalight). This technology will require some manufacturing, but overall it's less expensive than most solar plays because it limits the amount of silicon needed while producing equivalent amounts of power.
Solexant announced that it had raised $41.5 million in its third round of funding last week. It's also backed by DBL Investors, Birchmere Ventures, Trident Capital, Firelake Capital, Medley Partners and X/Seed.
In addition to hopping on the low-cost cleantech bandwagon, Olympus is indicative of another major trend in the industry: the founding of new firms by the newer generation of VCs. The shakeup in the business has not only prompted many older VCs to take their exit but has also caused some of their younger, more ambitious counterparts to leave the comfort of established firms to strike out on their own.
Olympus' founding partner, Rami Elkhatib, was formerly a VC at Southeast Interactive Technology Funds. And earlier this year, three newcomers to Bay Partners -- one of the oldest firms in the Silicon Valley -- abruptly resigned. One of them, Eric Chin, spun off to form Portola Venture Partners.
Opening up Olympus is a bold move for Elkhatib in this economic climate. As the Wall Street Journal points out, there are a third less venture firms active today than there were in 2000 at the very height of the dot-com bubble. And just between 2008 and 2009, the number of actively investing firms dropped from 985 to 893. It apparently took Elkhatib more than two years to assemble his first fund -- but the fact that he was successful at all defies industry trends.