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Exclusive: New York City’s newest VC firm

By
Dan Primack
Dan Primack
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By
Dan Primack
Dan Primack
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May 2, 2013, 2:06 PM ET
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FORTUNE — At just 29 years old, Mike Brown Jr. is already a venture capital veteran. He began by investing Richard Branson’s money at Virgin Group, before leaving in early 2010 to co-found AOL Ventures. Now he’s going out on his own.

Brown has formed an independent VC firm called Bowery Capital, which yesterday closed its debut fund with $33 million in capital commitments. It will be based in New York City (as the name suggests), although Brown expects to spend nearly half of his time in San Francisco.

Bowery’s investment thesis is that “digital natives” are moving higher and higher up the corporate executive stack, particularly into decision-making positions like chief marketing officer and chief technology officer. And those executives are more likely to favor “new” technologies over incumbents, at a time when enterprise technology spend is expected to double over the next decade.

Bowery data suggests that just 5% of enterprise technology spend — both internal and external — was allocated to “next-generation” solutions in 2011, but that the figure will rise to 16% by 2016 and 25% by 2020. Examples would include Jive Software (JIVE) taking market share from Salesforce.com (IBM), or Splunk (SPLK) vs. Comscore (SCOR) or Box vs. IBM (IBM).

The opportunity for Bowery, therefore, would be to invest in early-stage startups that specifically target the marketing and technology layer within large enterprises.

Brown says that he expects the fund to back around 25 companies, initially via seed and Series A investments of between $250,000 and $3 million. This would include a small group of companies that Brown has personally backed as an angel investor, which will be rolled into Bowery.

After making initial investments, Brown expects to be very hands on.

“Two days per week will be dedicated to working with existing portfolio companies,” he explains. “When these companies are getting started, we really want to be more than just money.”

That means access to a proprietary portfolio intranet that contains all sorts of relevant contacts/customers and other R&D information  (similar to what First Round Capital has done), and monthly events where portfolio companies can both learn from and network with current CMOs and CTOs. Bowery also has access to an advisory board that includes high-profile individuals from the startup, venture capital and corporate worlds.

Brown leads the firm’s investment team, and is joined by fellow AOL Ventures vets Nic Poulos and Keegan Forte.

Bowery venture partners include Neil Capel (founder/CEO of Sailtrhu), Zach Sims (founder/CEO of Codecademy),  David Soloff  (co-founder Premise Data, ex-CEO of Metamarkets), Adam Smith (ex-AOL Ventures/Google, current VP of product at Metamarket). Sailthru, Codeacademy and Premise Data all are existing AOL Ventures portfolio companies.

One outstanding question is what all of this means for the future of AOL Ventures, which no longer has any dry powder for new investments out of its original capital cache. My expectation is that AOL (AOL) will back a “Fund II” to be managed by bellow AOL Ventures co-founder Jon Brod, but it’s unclear if the media company has decided how much money to commit or if it needs to hire new staffers (Brown will continue to help manage out the Fund I portfolio).

An AOL spokeswoman declined comment, but said that she hopes to have information later today.

Sign up for Dan’s daily email newsletter on deals and deal-makers: GetTermSheet.com

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