A Laguna Beach venture capital firm that saw one of its companies get acquired last year has invested in an Irvine startup and is looking for another deal to close out its inaugural $30 million fund.
Okapi Venture Capital LLC, which targets medical and technology startups, recently invested $1.5 million in Irvine-based PathCentral Inc., which makes software for pathologists.
The firm led a $10 million second funding round for PathCentral that also included Ann Harbor, Mich.-based Arboretum Ventures and Chicago’s Baird Venture Partners, part of Milwaukee’s Robert W. Baird & Co.
Okapi plans to make another investment to close out its first fund with plans for a second one, according to cofounders and managing directors Marc Averitt and Sharon Stevenson, who started the firm five years ago.
The partners took the Okapi name from a giraffe-like African animal that protects and nurtures its young in a jungle setting.
Okapi’s10-year fund isn’t huge—others are four times as big or larger. The firm targets companies at the earliest stages, when most fail.
It has investments in eight companies.
In a tough year for venture investing, Okapi had something of a hit in 2010.
In July, Carlsbad-based Helixis Inc. was acquired for $105 million by Illumina Inc., a San Diego-based maker of gene sequencing instruments.
The sale provided a return of six times the money Okapi put in the company.
Stevenson lined up investors and made introductions that paved the way to a sale, said Alex Dickinson, cofounder and chief executive of Helixis who now runs Illumina’s polymerase chain reaction division.
Founders’ Backgrounds
Stevenson is a former senior vice president of technology and planning for Carlsbad-based SkinMedica Inc., a venture-backed company focused on dermatology and medical cosmetic products.
Earlier, Stevenson was a principal in the San Diego office of Domain Associates, a Princeton, N.J.-based venture capital firm.
She’s a veterinarian by trade who still misses doing surgeries.
Averitt worked in legal and global business development at Sun Microsystems Inc. and Intel Corp. before starting Okapi.
It helped that they had connections and leaned on some big-name backers, including Dwight Decker, former chief executive of chipmaker Conexant Systems Inc. and founder of technology group Orange County Technology Action Network.
They also tapped executives at Irvine disk drive maker Western Digital Corp., Irvine heart valve maker Edwards Lifesciences Corp. and Santa Ana-based Advanced Medical Optics Inc., now Abbott Medical Optics Inc.
Investors
In all, Okapi is backed by 31 investors, including individual and institutional investors and a handful of family offices that manage money for the wealthy.
“Every single one of them is from Orange County,” Averitt said. “We’re investing locally, and our investors are local.”
Other Okapi investments include: Newport Beach chipmaker RF Nano Corp.; Transaction Wireless Inc., a San Diego-based mobile commerce company; Aliso Viejo medical device maker OrthAlign Inc.; SecondVoice Inc., a Laguna Hills telecommunications software company; San Diego drug maker Obalon Therapeutics Inc.; and My Damn Channel Inc., a New York-based digital media and video company.
Investor Will Poovey, a lawyer and entrepreneur who has raised more than $170 million through various ventures, said he was drawn to Okapi’s business model.
“They really have a vision growing these companies,” said Poovey, founder and chief executive of Sourcing Solutions LLC in Irvine. “They just don’t put the money in and roll the dice.”
Poovey invested $1 million in Okapi’s fund and plans to invest in a second fund.
“The returns have been great,” he said. “It’s much better than any of my other investments have done.”
The gross annualized returns from the first fund are 26%, with net annualized returns topping 12%, according to Averitt and Stevenson.
“We have done exactly what we said we we’re going to do,” Averitt said. “We look for good opportunities and we take the time to vent them. Our process doesn’t deviate.”
