NEA seeks seed stage deals

June 2, 2011

— Alastair Goldfisher is the Editor-in-Charge at the Venture Capital Journal, a Thomson Reuters publication. This article originally appeared on PE Hub. —

New Enterprise Associates is planning to step up its pace of early stage investments, thanks in part, no doubt, to how the plummeting costs of launching a business make smaller investments potentially more lucrative.

NEA, which last month made early stage investments in Inporia, a stealth ecommerce startup, and Grubwithus, a social dining service, has reportedly formed NEA Seed Fund to target seed stage deals.

Details of NEA Seed Fund are unavailable, but the firm will reportedly invest from $50,000 to under $1 million in seed stage startups in various sectors. Funding for the seed investments will come from New Enterprise Associates 13, a $2.5 billion fund that the firm uses to invest in all stages in health care, cleantech and IT in the United States, India and China.

The firm is said to already have begun making seed stage bets as part of its new strategy, although it’s unclear if Inporia and Grubwithus are a part of NEA Seed Fund.

News of the seed fund was first disclosed by VentureWire, which was informed of the seed stage pool by “several people” who attended the firm’s annual meeting last week in Baltimore, Maryland.

An official NEA spokesperson was unavailable for comment.

The seed stage efforts will reportedly be led by Jon Sakoda and Patrick Chung, two partners based in the firm’s Menlo Park, California-based office.

While some firms, such as Institutional Venture Partners and Kleiner Perkins Caufield & Byers, have recently raised funds to specifically target growth stage deals, NEA and others are likewise carving out some of their main funds to make sub-$1 million early stage bets.

Among the firms with dedicated seed stage efforts is Index Ventures, which last year launched Index Seed and allocated a dedicated pool of capital with the aim of closing about 20 early stage deals in the next two years with initial amounts of between $50,000 and $1 million, compared to about 30 such deals in the last five years.

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