Microsoft

Late Microsoft co-founder Paul Allen’s Vulcan spins off VC group with new name, broader investor base

Vulcan Capital, initially created to handle Paul Allen’s investments, is now Cercano Administration, a privately held funding agency working with a number of buyers and household foundations.

Vulcan Capital, the enterprise capital group based in 2003 as an inner division of Paul Allen’s Seattle-based Vulcan Inc. holding firm, has been spun off right into a standalone agency as a part of a broader reassessment of the late Microsoft co-founder’s far-flung pursuits and investments following his October 2018 demise.

Going by the identify Cercano Administration, the group is now “a separate and distinct entity from Vulcan,” a Vulcan spokesperson confirmed. The primary signal of the change got here earlier this month, when Cercano was named as an investor in a $5.9 million funding spherical for Seattle startup Pendulum, a Madrona Enterprise Labs spinout.

It’s a brand new period for a bunch that has been a quiet powerhouse in tech, web and life sciences investing, working for almost twenty years inside Vulcan’s headquarters on the southern fringe of downtown Seattle.

With an estimated $10 billion in belongings below administration, Vulcan Capital has made 470 investments over that timeframe, in firms with a median valuation of $65 million, with an energetic portfolio of greater than 100 firms, in response to statistics compiled by enterprise capital database PitchBook.

Cercano is Spanish for “close by,” and the corporate is, certainly, staying near its roots. Primarily based in Bellevue, Wash., Cercano will proceed to work with Allen’s property.

It’s additionally sticking to Vulcan’s custom of secrecy. Quite a few folks affiliated with Vulcan Capital and Cercano declined to remark or didn’t reply to GeekWire’s inquiries. Thus far, the one content material on Cercano’s web site is its brand.

Nonetheless, Cercano’s on-line profile alerts a transfer to a broader investor base as a newly impartial firm. Whereas Vulcan Capital described itself as “the multi-billion greenback funding arm of Microsoft co-founder and philanthropist Paul Allen,” Cercano’s company LinkedIn web page says, “Privately held funding administration agency working solely with ultra-high internet value buyers and household foundations.”

Vulcan described the change in pragmatic phrases.

Paul Allen, the late Microsoft co-founder, began Vulcan Capital to handle his tech investments in 2003. (GeekWire File Photograph / Kevin Lisota)

“Cercano continues to handle the funding belongings of the Paul G. Allen property, and people of the Paul G. Allen Household Basis,” the Vulcan spokesperson stated. “This transition began in early 2021, and whereas it’s common for an funding administration group to function inside a household workplace, with Paul’s passing it made sense to separate that operate for authorized and tax causes.”

Vulcan declined to supply additional particulars about Cercano’s possession construction or management, however public information supply extra clues concerning the change.

Cercano Administration LLC and Cercano Administration Holdings L.P. had been formally established in September 2021, in response to Washington state firms filings. The information record former Vulcan Capital executives Chris Orndorff, Yongbai “YB” Choi, and Albert Hwang as company governors of the brand new entities.

Orndorff, who was beforehand Vulcan chief funding officer, is now Cercano’s CEO and chief funding officer, in response to his LinkedIn profile.

Steve Corridor, a mainstay of the Seattle tech scene who was Vulcan Capital’s longtime managing director earlier than shifting into a task as enterprise companion a number of years in the past, has additionally made the shift to Cercano, his profile signifies. Vulcan Capital director Stuart Nagae can be believed to be shifting to the brand new agency.

Jody Allen. (Vulcan Photograph)

Vulcan Inc. is led by chair Jody Allen, the late Microsoft co-founder’s sister; and CEO Invoice Hilf, a tech trade veteran identified for his previous roles at Microsoft and Hewlett-Packard Enterprise.

They’ve been going by a prolonged strategy of scaling again Allen’s many investments and initiatives following his demise in October 2018 on the age of 65, after he was recognized with a recurrence of non-Hodgkin’s lymphoma.

Vulcan Capital has had “a transparent and constructive impression” on Seattle’s startup ecosystem, stated Invoice Bryant, Seattle-based basic companion at Threshold Ventures, citing its investments in Blokable and Rad Energy Bikes as examples.

“Nonetheless, I’d say that Vulcan can be a narrative of unmet promise in that they weren’t extra energetic backing PNW firms,” Bryant added by way of electronic mail. “They clearly had the capital to deploy however for no matter cause weren’t prolific buyers [at the local level]. A part of this stems from their nationwide technique however I consider they might have performed a key position in offering domestically sourced observe on capital for development stage startups that needed to resort to in search of buyers from different geographies.”

Some Seattle-area buyers who’ve labored with and invested alongside Vulcan Capital over time stated its leaders might have extra leeway below the brand new construction in defining their funding focus.

However total, given the continuation in management from Vulcan Capital to Cercano Administration, the standalone agency’s basic method is predicted to stay a lot the identical, as a dependable behind-the-scenes participant.

Matt McIlwain, managing director at Madrona Enterprise Group, stated Vulcan has been a “decrease profile, however prolific companion in constructing firms with their capital and experience over a few years.” He stated Madrona is trying ahead to persevering with its collaboration with the longtime Vulcan Capital leaders below the Cercano identify.

“They’ve been very methodical … and so they’ve been very affected person,” stated entrepreneur and investor T.A. McCann, managing director at startup studio Pioneer Sq. Labs in Seattle.

McCann labored with Vulcan’s Steve Corridor to begin Vulcan Labs as an entrepreneur in residence at Vulcan Capital from 2006 to 2008. That effort led to the creation of firms together with Seattle startup Gist, which McCann led as founder and CEO earlier than its acquisition by Blackberry in 2011.

Vulcan Labs offered a mechanism to show Allen’s startup concepts into firms. His nickname of “Concept Man,” the title of his 2011 memoir, was well-deserved. Though the Vulcan Labs initiative later dissolved, Vulcan Capital continued to assist startup incubation and creation as an investor in teams together with Pioneer Sq. Labs and the AI2 incubator, an initiative of the Allen Institute for AI in Seattle, one other of Paul Allen’s many creations.

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