Venrock is having a good run.
The venture capital firm is among several investors that will receive a windfall from last week’s $1.1 billion sale of Cambridge’s Endeca Technologies Inc. to computer software giant Oracle Corp.
Venrock, which has offices in Cambridge, New York, and Palo Alto, Calif., also scored on Where Inc., which sold to PayPal for $135 million in April, and ExtendMedia, which Cisco Systems Inc. bought for an undisclosed sum last year.
For venture capital firms whose investments in early-stage companies help fuel growth in the Massachusetts technology sector, Boston has been a solid bet. Venrock, Battery Ventures, Matrix Partners, Highland Capital Partners, and Charles River Ventures have all invested in Massachusetts companies that were sold at billion-dollar prices over the past two years.
Such nine-figure deals are the home runs in the venture capital game. Venture investor firms fund start-up and growing companies, buying a stake in the business and often taking seats on the boards of portfolio firms, where they help guide the young firm’s managers toward a big payday. Generally, that comes in the form of an initial public offering or a sale of the company.
Big, profitable deals like the sale of Endeca, which makes search and business intelligence software, can take years to materialize, but such large returns on investments motivate venture capital firms to continue funding local start-ups.
Among some recent deals that helped venture capitalists cash out big: the sales of Marlborough big data company Netezza Corp. to IBM Corp. last year for $1.7 billion, and the acquisition of mobile infrastructure provider Starent Networks Corp. by Cisco for $2.9 billion in 2009.
Those deals rewarded local venture capital firms such as Venrock, Battery, Matrix, and Charles River, which all provided early-stage funding to seek profits from an eventual sale or public offering. The firms declined to reveal how much money they made on those investments.
Venture capital is something of a fashion industry, with investors seeking the next big thing. One year, it may be life sciences companies; at another time, it might be online shopping sites. Boston’s under-the-hood tech companies like Endeca and Starent may have been profitable recently, but the area has been short on the consumer tech and social media firms that are now attracting investments in New York and Silicon Valley.
Venture capitalists here are hungry for the next LinkedIn Corp., Tumblr Inc., or Twitter to be locally grown. Many see promise in some young companies like SCVNGR/LevelUp, the Cambridge gaming and mobile payments company, and within incubation centers such as Cambridge’s Dogpatch Labs, which was started by Polaris Venture Partners.