Backed in part by the cellular communications fortune of John McCaw, Microsoft General Manager Peter Atkins this summer will launch Seattle, Wash.-based Permian Partners with the goal of turning it into a $50 million to $100 million fund.
Atkins, who helped launch Microsoft media properties including Expedia, Carpoint and Sidewalk, along with various music initiatives, said today's frigid investment climate for high-tech start-ups--particularly media companies pursuing advertising or subscription models--would provide an opportunity to buy low and, when the economy turns around, sell high.
The VC firm was named with this cycle of bust and boom in mind: Permian refers to the last period of the Paleozoic Era, which ended in what the American Heritage Dictionary refers to as "the largest known mass extinction in the history of life."
It was followed, Atkins hastened to point out, by a proliferation of new species.
"It's a great time now," said Atkins from his Redmond, Wash., office. "The environment two years ago was that most of the companies out there in the Internet space were, in my opinion, fairly overvalued. Today just the opposite is true, and that is particularly true in terms of the smaller companies. The idea behind Permian is that we're going to identify and invest in the ones that can be successful and use the experience gained over six or so years at Microsoft to help them grow and prosper."
Atkins is not alone among Microsoft alumni turning their sights to venture capital investing. Last year, Microsoft former Senior Vice President Brad Silverberg launched Ignition, a VC firm focused on wireless start-ups. Conceived at the height of the market for wireless technologies, the company has had to change course in the downturn, broadening its business focus beyond wireless technologies to include communications and Internet infrastructure.
Lending cash, office space and other infrastructural support to Atkins' VC activities is Orca Bay Partners, a division of John McCaw's Orca Bay Capital. McCaw was a co-founder of McCaw Cellular Communications, which AT&T bought in 1994 for $11.5 billion.
Atkins and Orca Bay Partners declined to say how much money Orca Bay will put into Permian. But Orca Bay Managing Director Ross Chapin said the Microsoft veteran's focus on Internet media start-ups would be a good complement to Orca Bay's focus on more mature companies that provide financial services.
"With his experience at Microsoft, Peter brings an enormous amount of experience in seeing a wide range of different business models, in seeing what can work and what makes sense in the marketplace as we look at the next iteration of the Internet," Chapin said. "The real problem is that investors don't know what made some companies succeed and others fail. Peter brings a unique perspective that will be incredibly valuable in differentiating the two in the next wave of Internet technology businesses."
Billing itself a venture capital and hedge fund, Permian will invest in small companies, both publicly and privately held.