OpenView Shows It’s Not All About Facebook and Groupon for VCs

Photograph courtesy of OpenView

OpenView Venture Partners, left to right, George Roberts, Adam Marcus, Scott Maxwell and Brian Zimmerman.

For venture capital funds not focused on social networking, mobile apps or e-commerce, there’s still hope when it comes to fundraising. OpenView Venture Partners took less than three months to raise its latest $200 million fund, and all of that capital is going to startups developing software for businesses.

Peering at OpenView’s website, there aren’t many household names. There’s no Facebook, Twitter or Zynga and not a single public company. Only one of its startups has been acquired, a company called Loyalty Lab that was bought in 2010 by Tibco Software. None of that matters to OpenView’s five partners. They see billions of dollars to be made as companies change the way they buy and use software, even if that trend makes for less entertaining cocktail party conversation.

“When I joined in 2009, people were saying — what are you doing, enterprise is dead, it’s all about Groupon and Facebook and Twitter,” said Adam Marcus, a partner at the Boston-based firm, who previously worked at Battery Ventures.

Investors in those companies are finding plenty of new capital. Accel Partners, Founders Fund and Sequoia Capital have all raised funds in the past year, and Institutional Venture Partners is currently seeking to raise up to $1 billion, people familiar with the matter told Bloomberg News earlier this month.

But Marcus says OpenView is finding the “hidden gems.” The six-year-old firm has raised a total of $445 million in three funds. Its investments include marketing technology companies Balihoo and Monetate, and cloud-hosting company Xtium.

While most of OpenView’s startups are too young to go public, the firm’s strategy is gaining momentum as more mature software-as-a-service companies complete their IPOs. Bazaarvoice, a provider of marketing software, went public last month, and e-mail marketing company ExactTarget will hit the market this week. That’s what OpenView’s limited partners are seeing, in addition to the rising value of the firm’s companies.

“The LPs are excited because they’ve gone through our portfolio and recognize a lot of inherent value,” Marcus said. “Both funds are sitting in very good states.”

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