Serra Ventures, a venture capital firm focused on Midwestern companies is on its way to raising $50 million, and it’s eyeing a handful of potential investments.

Serra Ventures, at the University of Illinois at Urbana-Champaign’s Research Park, aims to nearly triple the size of its second fund and invest in 40 to 50 startups through its third fund, launched in January, managing partner Tim Hoerr said.

“We’ve evaluated over 200 deals for potentially receiving funding,” he said. “At this point, we have a short list of 10 or 15 companies we’re pretty serious about.”

Serra tends to invest in information technology, medical devices and agricultural tech companies. It’s an early-stage investor, usually jumping in after the seed round or in the Series A.

“We typically like to see a company that has been through an incubator or accelerator,” Hoerr said. “They’ve come out on the other end a more mature company in their approach to the marketplace.”

Members of Matter, a Chicago health tech hub, or EnterpriseWorks, an incubator at the Research Park, pop up frequently in its portfolio. Diagnostic Photonics, which raised $3.1 million in January to fund a clinical trial for its imaging probes for cancer surgeons, is one of them.

The Matter-based company has raised $5 million in capital, and Serra is its third-largest investor, said Diagnostic Photonics CEO Andrew Cittadine, who will be an industry adviser for Serra’s third fund.

Serra Ventures launched in 2008, and it has deployed the majority of its investments to companies based in Chicago, St. Louis and at U. of I.’s tech hub. It plans to look at other Midwestern cities this time around, too.

There are about 40 companies in Serra’s portfolio, he said. Four companies it invested in have failed, and six have sold.

Serra Ventures officially started raising for the fund in January and so far has secured more than $13 million, according to Securities and Exchange Commission filings.

Hoerr said it has already invested in three companies — and two of those are based on the West Coast. But Hoerr said most of the other companies under consideration are based in the Midwest.

Alida Miranda-Wolff, associate manager of Chicago-based venture fund Hyde Park Angels, said Serra Ventures’ focus on the Midwest is key as tech startups start to gain a stronger foothold.

Hyde Park Angels has co-invested with Serra in companies such as Chicago-based Rithmio, which develops gesture-recognition platforms for wearables.

“The Midwest is the ripest ground for new tech innovation right now because it’s an emerging market,” she said. “A lot of the capital in Chicago doesn’t stay here, and it should.”

Source: Serra Ventures hopes to raise $50M in new fund, invest in 50 startups – Chicago Tribune