New Kids on the Block

Justin Hibbard

"Why a new firm?" That question appeared in a slide presentation shown many times last year by Shasta Ventures, a new VC firm that has just finished raising its first fund. As the firm's founders made the rounds of potential investors in 2004, they knew the question would come up, especially since concerns about an oversupply of capital have recently dogged the VC industry. What's more, Shasta is proposing to specialize in the most crowded part of the VC market: early-stage startups. Yet the firm managed to raise $200 million for its inaugural fund, which is $25 million more than it had anticipated. Is that simply because too much money is too readily available? In this instance, I think not.

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