Sunbridge comes to Silicon Valley

The Japanese venture firm is setting up shop in Palo Alto with the formation of Sunbridge Partners, to be run with the help of former Equitek Capital directors Ken Ehrhart, Paul Grim and John Gannon.

Bucking recent trends, Japanese venture firm Sunbridge Corp. announced the formation of a U.S.-based venture capital subsidiary.

Equitek Capital directors Ken Ehrhart, Paul Grim and John Gannon will join Sunbridge chief executive officer Allen Miner in the new venture capital arm.

Also on the Sunbridge Partners board are Takaaki Nagayama and Kenji Uchida, both executives with Sunbridge.

The Palo Alto-based Sunbridge Partners will focus on venture capital investments in U.S.-based start-ups in the computing, communications and software fields, as well as utilising its parent company’s connections to the Japanese marketplace.

Ehrhart, Grim and Gannon work together at the Ohio- and North Carolina-based Equitek Capital fund, which also focuses on North American technology companies. Founded in 2000, Equitek brought together Ehrhart, who was the director of research at the Gilder Technology Report, and Grim, who came from Gemini Consulting and has been heavily involved with the European telecom industry. Gannon joined Equitek from Barclays Capital and has worked in the aerospace industry.

The Sunbridge subsidiary plans to focus on private technology companies, a strategy similar to Equitek’s Technology Fund II. That fund has a target of $75 to $100 million and invested in start-ups like Flarion Technologies, Eclipse Aviation and Alien Technologies. The future of this fund is not clear.

“We prefer companies that have done most of the backroom research,” Ehrhart said of Equitek’s investment strategy in a 2003 interview. “They’re beginning to reach the stage of breakthrough orders. Often they’re pre-revenue, but they’re at the point where everything is in place to begin sales into their markets and to ramp production.”

The announcement runs contrary to recent trends in the venture industry, which has experienced a dearth of new fund formations and a number of fund pullbacks or closings as a result of the tech downturn. For example, in spring 2002, Accenture pulled the plug on its Accenture Technology Ventures, which had planned to invest $500 million over five years. In 1998, Lucent Technologies dedicated $100 million to its in-house venture capital unit Lucent Venture Partners. By 2002, Lucent had halted all new investments for the venture capital division.

Oracle Japan founder Miner started Tokyo-based Sunbridge in 1999. With 55 professionals, Sunbridge has become a force in the Japanese venture capital community with investments, entrepreneurial support, consulting and market-entry services. Through two funds, Sunbridge has invested in more than 30 companies. Portfolio companies like online CRM provider salesforce.com, wireless gaming company G-Mode, internet marketing research firm MacroMill and camera phone motor manufacturer Shicoh Engineering have gone public.