Ascent Venture Partners Says Data Intelligence Is the Next Big Thing, Tech Startups Will Get Scooped Up Like Biotechs, and Bigger Isn’t Always Better

Boston-based Ascent Venture Partners seems to know what it’s good at. The firm, which started as a VC subsidiary of the Pioneer Group and went independent in 1999, has stayed faithful to its focus on early-stage IT companies.

“We don’t try to redefine ourselves around every fund on what’s the flavor of the day,” Ascent general partner Geoff Oblak told me when I visited the venture team in their Boston office last month. The firm has backed about 100 startups in its history, and typically invests in companies that already have handfuls of customers.

Ascent has stuck to funds in the neighborhood of $150 million—what it says is an appropriate size for early-stage deal making. It has maintained this tactic even through the surge of VC money earlier this decade, and hasn’t had to shrink its funds in response to the smaller venture pool in the past few years, as many other firms have. Many of its investments hover in the neighborhood of $2 million to $5 million, says partner Matt Fates.

Fates and the other team members make it a point to stay involved as board members of its portfolio companies, working with them on day-to-day or week-to-week bases, he says. Typically, each venture member sits on no more than seven boards. They heavily advise portfolio companies on developing their business models and staff, which are areas that Fates says pose the greatest threat to success among early-stage companies. “It’s not usually a technology risk,” Fates says.

“It’s very hard to take a little company and to grow it rapidly,” Oblak says. “We view it as a craft.”

Below are three major themes I pulled away from my conversation with the Ascent team.

1. Look for potential leaders in very new, must-have markets.

Ascent likes to spot companies that occupy space in “small, embryonic” markets of roughly $25 million to $50 million but are poised to create industry standards, Oblak told me.

To illustrate this point, he filled me in on one of Ascent’s big wins: Guardium, a maker of data security software. Yes, I know, security software has been around for decades. But Guardium’s focus isn’t on blocking intrusions from outside Internet hackers, but rather on protecting corporate databases from internal security threats. Oblak says the firm researched the market and found that the industry for software that protects against data threats from within companies was far less common than software defending data against outside hackers. Something about the security products is also very likely to “withstand budget scrutiny,” making them durable in a recession, he says.

Ascent invested in two rounds of funding for Guardium after … Next Page »

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