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Sigma Prime wrapping up new $150 million venture capital fund, following break-up with west coast office

Posted by Scott Kirsner  October 2, 2012 04:10 PM

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You don't often see well-established venture capital firms get divorced, but that's what happened last year at Sigma Partners. The teams of investors based in Boston and in Silicon Valley decided to go off and raise separate funds, rather than continuing to work together.

The new Boston firm will be known as Sigma Prime, and sources in the VC industry tell me that the partners expect to have finished raising a $150 million fund before the end of the year. Sigma Prime may not hit that $150 million target, but my sources tell me they expect the new fund to wind up in the $120 million to $150 million range, and invest primarily in business-to-business technologies and services. Partners Bob Davoli, right, Paul Flanagan, and John Mandile will oversee investments out of the new fund, with help from Raju Rishi, a venture partner based in New York City. (While based in Boston, Mandile also follows the Atlanta startup ecosystem closely.) As I reported back in August, former Sigma principal Richard Dale is out trying to raise his own fund, Big Data Boston.

Flanagan told me that he couldn't say much, because of the on-going fundraising process, but he did confirm the partner new line-up for Sigma Prime. "We're constantly trying to find interesting people and ideas to back," Flanagan said, adding that two of his recent investments (out of the final Sigma Partners fund) have been hardware companies: Rethink Robotics and iWalk, a Bedford-based maker of prosthetic devices. Sigma Prime unveiled a new website over the summer, but it has since been taken down for re-tooling.

The Sigma Prime partners have already made two investments out of the new fund, one in New York and one in Massachusetts, according to my sources. They've also made several seed investments as individuals, in startups like Evoqu.

"I don't think as a firm they are looking to do a lot of seed investing," says Eric Hjerpe of Kepha Partners, a Waltham firm that has often invested alongside the old Sigma Partners. "I think they'll continue to be great Series A investors, and they're most comfortable with B2B stuff."

Sigma hasn't historically been the most visible VC firm in town, in terms of hosting events or participating in panels. "I think they really rely on having very strong networks from their prior investments," Hjerpe says.

Sigma's past investments out of the Boston office include companies like Vlingo (acquired by Nuance), Initiate Systems (acquired by IBM), and Aprimo (acquired by Teradata.)

It'll be interesting to see when Sigma Prime officially unveils the new fund — and what number they land on.

(The photo above is from a Boston Globe profile of Davoli I wrote in 2010.)

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About Scott Kirsner

Scott Kirsner was part of the team that launched in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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