Odeon Capital Aims to Bring Expanded Value to VC Funding.

By John Rogers There's a new venture capital group open for business which aims to bring a unique style of funding to the technology community. New York-based Odeon Capital Partners is an early-stage fund which, like quite a few others, focuses on internet and IT infrastructure opportunities. But Odeon has a model that sets it apart from most funds, in that it offers more than just managing partners to provide direction for young companies. Odeon has a management team with a pedigree, led by Matthew Smith, a former partner at Applewood Associates and Wheatley Partners; Jeffrey Finkle, former vice president of corporate business development at Computer Associates International Inc; and Ira Machefsky, former vice president and senior analyst at Giga Information Group. Smith's strengths are in venture capital and portfolio management, while Finkle brings marketing and operational skills. Machefsky rounds out the team with experience in strategic planning and research within the industry. Finkle says his firm is taking a newer approach to VC with the specialized skill sets of his partners, explaining that Odeon didn't opt for just assembling "a bunch of ex-MBAs." Instead Finkle feels that the companies it funds will benefit from the research and technology mentality at Odeon. Beyond the core management team, Odeon offers a formal extended team, which consists of an advisory board of industry brass, strategic investors - including the likes of internet services firm US Web Inc and a major investment bank - and consulting partners, many of whom are retired CEOs themselves. The value proposition for this "extended team" is that all parties are given the opportunity to co-invest or even assume a board or direct advisory role with the companies funded. Corporate investors can also benefit from what essentially becomes "off-balance sheet R&D" through work being carried out by start-ups that may be complementary to their own. Finkle describes the setup as a sort of "incentive plan" for those who bring something of their own to the table. What all that means for a start-up that inks a deal with Odeon is that the company will receive a lot more than just "dumb money." In addition to cash, Finkle feels his model provides a young company with all of the best qualities of what the perfect VP of marketing should do: create a problem space and then position the company's product as the solution; work directly with engineering on fulfilling real customer needs; and drive revenue. Finkle points out that very few marketing people have all of the requisite skills, making Odeon's capabilities all the more attractive. Odeon has a targeted investment strategy, focusing on software and service companies that enhance productivity between a corporation and its employees, prospects, customers, partners and suppliers; companies that facilitate/conduct electronic commerce; and companies that support critical business infrastructure. The fund's investments will average $3m-$5m, and the managers expect to eventually have a portfolio of 20 to 25 companies. The capitalization target for the fund is $100m and will have diversification from mostly early- to select late-stage financing deals. The initial commitment of $30m in capital closed on December 30 and Odeon now claims to have about $60m in total. Discussions on raising the other $40m are ongoing. The fact that the firm is only a little more than half way to its goal hasn't stop it from making a few deals already, however, as Odeon has funded four companies to date. The first is Opus 360, a New York-based provider of enterprise resource planning applications catered to professional services companies. Another is Dealtime.com a web-based shopping comparison service which allows consumers to set a price for items and then notifies them when their price is met. The other companies which have won Odeon funding are Avicon Group, a consulting firm specializing in e- business supply chain automation, and Free Ride, which provides online lo yalty and incentive programs.