Lehman alumni raise first standalone fund of $372M, Tenaya VI

The formula may not have worked for Lehman Brothers Holdings Inc., but the five-man team that ran Lehman’s VC arm and banded together to form new investment firm Tenaya Capital has since been going from strength to strength.

Today, the firm announced its first standalone fund, Tenaya VI, proving that sometimes all it takes is a shiny new image and a California mailing address to succeed in VC. The partners told me they set out to raise $300 million for their sixth fund and overshot by $72 million.

“Yes, we created a new name. But it remains the same five guys, same strategy…” Tom Banahan, a managing director at the firm, said in a phone interview with VentureBeat. Tenaya derives its name from a lake in Yosemite National Park.

Above: Tom Banahan, Tenaya’s Capital’s managing director

It’s been a hell of a run for Banahan, who reels off Kayak, Endeca, and Zappos as some of the firm’s most celebrated investments. Minutes later, he shifts gears, and we’re back to 2009 on that dreaded day he received the email that Lehman Brothers was filing for bankruptcy.

“We started at midnight and by 7am, we had sent an email to all our limited partners and every CEO of every portfolio company to say how they mattered,” said Banahan.

Banahan attributes the firm’s fundraising success, which he describes as “an easy process”, to the strong and continued support from the limited partners who invested in previous funds. For the new fund, Tenaya only needed to raise 25 percent of its fund from new investors.

Banahan said the firm is “no good with four guys in a garage” but specializes in startups in the earlier stages of revenue growth. It looks for mid- to late-stage companies across the technology spectrum from e-commerce to enterprise search. The investment model, which Banahan refers to as the “thesis approach”, involves beginning with a premise and seeing the story out to its logical conclusion.

The strategy seems to be working. Back in 2003, Tenaya raised a fund to support the thesis that in the near future, enterprises would ascribe real value to unstructured data. One of the companies that seemed poised to meet this need? Endeca, the business intelligence tool which sold to Oracle for a tidy $1.1 billion.

Other recent exits and notable portfolio companies include Cotendo, InfoBlox, Isilon, LifeSize Communications, Palo Alto Networks, and PowerReviews.