Avalon Ventures Begins Fund-Raising for Ninth Fund, Sets $150M Goal

Xconomy San Diego — 

San Diego’s Avalon Ventures has embarked on fund-raising for its ninth venture fund, and intends to raise $150 million from its investment partners, according to a report this morning on VentureWire. Kevin Kinsella, who founded Avalon in 1983, confirms the report, but otherwise declined to comment.

In a profile of the firm just last month, Luke focused primarily on Avalon’s life sciences deals, and on its success in carving out a niche in very early, seed-stage investments. As partner Jay Lichter told Luke, Avalon’s preference for cocktail-napkin-sketch deals runs counter to the venture capital industry’s prevailing current, which is to minimize the risk and maximize the likelihood for relatively quick returns by investing in late-stage deals. Avalon’s life sciences deals include investments in Zacharon Pharmaceuticals, Otonomy, and aFraxis.

Yet Avalon has two other partners, Steve Tomlin and Rich Levandov, who manage the firm’s investments in wireless communications and Web media applications, which include E-Band Communications, Cloudkick, and Nabbr. Avalon plans to invest its next fund much like it has in Avalon VIII, with about half the deals in life sciences and half in Web and wireless deals.

The biggest success by far in the firm’s current portfolio is the San Francisco-based Zynga game network, developer of social games like Mafia Wars and FarmVille, which is why I get such messages on FaceBook as “Leana started the Tossin’ Tomatoes job in FarmVille and wants YOU to help!” Zynga has raised $219 million since it was founded three years ago (other investors include Kleiner, Perkins, Caufield & Byers and the Foundry Group), and said last November it had more than 100 million users on its social gaming networks.

Avalon plans to raise about $150 million for Avalon Ventures IX, and plans to close the fund before exceeding $200 million. VentureWire reports that Avalon hopes to hold a final close on its fund June 30.

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