DURHAM – IDEA Fund Partners is growing its footprint, just began deploying its third fund, and believes it is on to something really good with its latest deal.  Too bad for us, they’re not willing to share the bounty just yet.

IDEA Fund Partners

One of the state’s leading early-stage venture firms confirmed to WRAL TechWire that it recently made its first investment from its third fund in a “big data company” based in the Triangle.

However, the name of the startup and the exact amount of the investment is still under wraps.

“[The company] is intentionally flying under the radar until they get further along,” said John Cambier, founding managing partner at IDEA Fund Partners.

“We believe a significant contributor to the value of the company is the proprietary data set we are assembling,” he added. “We don’t want to tip off competitors as to the uniqueness and availability of this data set until we have it wrangled up.”

The group is also remaining tight-lipped on the other venture firm that they partnered with as part of the series seed round.

“I can’t tell you. That would probably give it away,” Cambier said.

The startup is expected to come out of stealth mode “late this year or early next year” once the next round of financing is raised.

Cautious optimism

With venture capital fundraising at record highs across NC and the country, some might consider this announcement another strong sign of better times to come.

Lister Delgado

But Lister Delgado, another founding managing partner with IDEA Fund Partners, cautioned it’s important not to get ahead of ourselves.

“The economy is doing well. Investments go up when that happens,” he said. “At the same time, the venture capital industry is fairly small, so large investments by funds in a few companies tend to skew the numbers significantly. In venture capital, it is hard to make meaningful conclusions from short-term figures.”

Still, the group remains optimistic about their latest backing. As for the firm’s other portfolios?

“Both IDEA Fund I and II are fully allocated and not making new investments. However, the portfolio companies in each are growing rapidly and, in many cases, are continuing to raise new capital,” he said. “We let our companies choose when and how to announce their financing events, but I can tell you that we’ll see a nice one here locally before the summer is out.”

Expanding footprint

Back in 2003, Delgado and Cambier got their start in early- stage venture while investing out of the MCNC Enterprise Fund. At the time, they were working at MCNC Research and Development Institute, what today is known as NC IDEA.

To enable them to deploy a new fund with capital from investors, the ventures team spun out of NC IDEA to form IDEA Fund Partners in 2007.

Today, Delgado and Cambier are the only two remaining founders. Together, they continue to build one of the most active seed and early-stage funds in the southeast US, managing over $45 million across three primary funds.

While the firm has investments scattered across the country, most of its portfolio firms are located in North Carolina. But that could change.

IDEA Fund Partners recently added a venture partner in Richmond, Va., and also opens to expand into other markets across the southeast as well as Mid-Atlantic.

“Our firm is interested in investing in ‘underserved’ cities, like Richmond, that have strong innovation ecosystem, but lack early stage capital,” Delgado said.

Other cities on their hit list: Charlotte, Atlanta, DC, Orlando, Miami, Pittsburgh and Denver.

Investing in companies founded by “underserved entrepreneurs” like women and other minorities is also a top priority.

John Cambier

What isn’t as attractive as it once was is investing in software companies, said Delgado.

“It’s easier than ever to build software solutions, and it is hard for software companies to differentiate themselves,” he said. “There’s a lot more noise so it is harder to find the stars.”

Instead, services companies offer “better opportunities” – such as the on-demand car maintenance startup Get Spiffy, which IDEA Fund Partner invests in.

The only clincher is that “you have to play it for the long run”.

“Given that it’s a lower margin business than software, the payback on this investment is not immediate,” Cambier said.  “At the same time, once operating in a market for some time and delighting customers, the name recognition and brand value is an intangible asset that is hard for a new competitor to displace.”

“It’s not that we’re not going to invest in software companies,” he added. “It’s not an insurmountable game, but it’s a dangerous game, especially if you’re operating outside of Silicon Valley.”