Guggenheim Partners, the Chicago- and New York- based investment and financial services firm, has hired three managing directors away from TL Ventures to launch Guggenheim Venture Partners.
Michael Burns, Javier Fernandez and Eric Rothfus will become managing directors at the new venture capital division of Guggenheim and pursue early stage investments in the networking, communications and component arenas.
Burns, Fernandez and Rothfus have worked together at TL Ventures as a team for the past four years. TL Ventures has offices in Wayne, Pennsylvania and San Mateo, California.
“Guggenheim Partners scouted the VC field for the talent capable of building a different type of VC practice,” said Dominic Curcio, a managing partner of Guggenheim Partners.
In particular, Guggenheim Venture will pursue so-called fabless semiconductor startups, where innovative semiconductor designs are fabricated by third parties and sold to equipment makers.
According to Burns, the fabless strategy is attractive because it requires relatively little capital up front, but winning designs that are incorporated by major digital equipment makers can yield large and quick profits. “These designs can go from zero to many, many millions of dollars,” says Burns.
Central to Guggenheim Venture’s strategy will be sourcing entrepreneurs located outside of the traditional venture capital hotspots such as Silicon Valley and Boston’s Route 128. Instead, Guggenheim Ventures will source deals among the many current and former tech executives who populate the Mid Atlantic states, the Southwest and the Pacific Northwest.
The firm will have offices in Philadelphia, Dallas and Portland, Oregon, according to a spokesperson.
These regions have “a lot of first-time entrepreneurs,” says Burns. “It’s not like Silicon Valley where people are working on their fifth deal.”
Guggenheim Ventures will raise an initial fund targeted at $150 million (€118 million), with the bulk of commitments coming from Guggenheim Partners.
Burns said he expects to announce the firm’s first deal in the near future.
Guggenheim Partners’ other private investment divisions include an aviation investment group, a fund of hedge funds platform, and an affiliation with new buyout firm SPG Partners, led by former Ripplewood Holdings partner Ian Snow.