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Polaris Venture Partners
Company typePrivate ownership
IndustryPrivate equity
Founded1996
FounderJon Flint, Terry McGuire, Steve Arnold
HeadquartersWaltham, Massachusetts, United States
ProductsVenture capital
Total assets$3.5 billion
Number of employees
35+[1]
Websitewww.polarisventures.com

Polaris Venture Partners is a venture capital firm specializing in seed and early stage investments particularly in companies engaged in the information technology and life sciences sectors.

Polaris is based in Waltham, Massachusetts with an additional office in Seattle, Washington. The firm has over $3 billion under management and current investments in more than 90 companies.[1]

History

Polaris Venture Partners was founded in 1995/1996 by Jon Flint, Terry McGuire, Steve Arnold, who were partners of Burr, Egan, Deleage & Co. (BEDCO).

History of private equity
and venture capital
Early history
(origins of modern private equity)
The 1980s
(leveraged buyout boom)
The 1990s
(leveraged buyout and the venture capital bubble)
The 2000s
(dot-com bubble to the credit crunch)
The 2010s
(expansion)
The 2020s
(COVID-19 recession)

Polaris was the first of four successors to Burr, Egan, Deleage & Co. (BEDCO), one of the earliest bi-coastal venture capital firms in the US, which dissolved in 1996. One of the contributing factors in the dissolution was the departure of three of the three founders of Polaris. The three founders, left BEDCO in 1995 and began raising their first independent venture capital fund.[clarification needed]

Among, its investments are Advanced Inhalation Research, Akamai Technologies, Allaire Corporation, Alnylam Pharmaceuticals, American Superconductor, Aspect Medical Systems, Avici, Berkeley Systems, Centra Software, Classifieds 2000, Conductus, deCODE genetics, Exchange.com, Heavy.com, Internet Brands, Jibjab, Mariner Health Group, Matrics, Momenta Pharmaceuticals, Paradigm Genetics, Powersoft, PSCI, Recurly, SolidWorks, turntable.fm, and Watermark Software.[1]

Investment funds

Since 1995, Polaris has raised five venture capital funds with over $2.6 billion of investor commitments. To date, all of the Polaris funds have been above average performers for their respective vintage years. Polaris Venture Partners V, which was closed in 2006, raised $1 billion of investor commitments.

  • 1996 - $80m - Polaris Venture Partners
  • 1998 - $175m - Polaris Venture Partners II
  • 2000 - $470m - Polaris Venture Partners III
  • 2002 - $900m - Polaris Venture Partners IV
  • 2006 - $1000m - Polaris Venture Partners V

Organizational Structure

Polaris Hierarchy

Polaris’ leadership is structured as a partnership, employing four Venture Partners to lead the firm rather than a Chief Executive.[1] The Venture Partners head a board of eleven General Partners, representing the firm’s managerial branch.[2] The Principal position is an intermediary between the firm’s junior ranks and the administrative board, given to those seen as potential future Partners. The most junior analytics position at Polaris is the Associate, who after a few successful years may be promoted to Senior Associate. The Partners also lead the Operations group, which although not part of the direct structural chain, facilitates internal and external relations for the firm at each structural level.[3]

The organizational structure employed at Polaris is an example of bureaucratic control, which institutionalizes hierarchical power with all company policy.[4] Procedure, rules, and compensation are systematically embedded in the firm’s business model, creating an impersonal understanding of responsibility at each level of the company.[5]

Division of Labor

Polaris divides responsibility quite clearly based on structural hierarchy and employee skill-set. The Partners and Principals are each tasked to one of the firm’s portfolio focuses—technology, healthcare, and consumer—and are responsible for seeking potential clients, making initial contact, and leading negotiations, among other administrative tasks.[6] Partners also represent Polaris on the boards of their clients, aiding in management strategy and keeping updated with the firm’s investments.[7] Associates work directly with Partners, handling analytics, research, and due diligence in order to evaluate potential clients and structure deals, while also providing portfolio recommendations.[8] Though the firm’s investment decisions are trusted to Partners, Principals, and Associates, the Operations group directs all actions necessary for the company to successfully function. These responsibilities include recruiting employees, updating investors, and maintaining computer networks.[9]

Polaris’ allocation of responsibility across the firm reflects theories raised by Adam Smith on the division of labor.[10] As argued by Smith, such division allows workers to focus on specific tasks and specialized skill-sets, leading to improved efficiency and competitiveness across the entire firm.[11] Polaris delegates duties based on both rank and industry coverage, a strategy that according to bureaucratic control theory improves motivation and morale, due to workers having distinct roles in the company.[12]

Firm Culture

The firm promotes productivity and cooperation through extensive training and a team-oriented environment. Associates generally join the firm after several years of consulting or investment banking, and are re-trained as a group upon arrival to cement their skill-set.[13] Additionally, the firm typically requires new employees to spend time working with one of their portfolio companies prior to joining full-time. To incentivize efficient work, Polaris requires employees to hold stakes in the company’s investment funds, also compensating hard work with larger fund shares, higher pay, and internal promotion. Teamwork is highly valued at the firm, as it employs a group orientation process for new hires and all investment projects are performed with constant interaction between workers from different levels of the company hierarchy.[citation needed]

By requiring prerequisite work experience in consulting, investment banking, and startups, Polaris sets a high organizational standard using bureaucratic control.[14][page needed] The firm’s group training and orientation demonstrate the emphasis on building a cooperative team environment, an important aspect of company function as noted by Laurie Graham.[15] Partners and Associates regularly interact on projects, reflecting Graham’s observation that firms function well when the team concept supersedes company hierarchy.[16] This cooperative relationship also demonstrates the concept of scientific management, in which managers and employees rely heavily on each other and share responsibility.[17]

External Relationships

Polaris’ main external relationships are with its investors, portfolio companies, and subsidiary incubator, Dogpatch Labs.[18] An investor is given the title Limited Partner and has exclusive access to fund updates and other private company information.[19] Polaris also maintains close contact with portfolio companies by having Partners sit on their boards, allowing a greater presence in aiding their growth.[20] The incubator Dogpatch Labs provides startups with the opportunity to build their companies in a cooperative, casual, and innovative environment.[21] Polaris guides these startups, watches their growth, and often invests in them after gaining a strong understanding of their business models and management.[22]

The hands-on relationships Polaris holds with its main contact groups reflect an effort to minimize “social distance,” as referred to by Fritz Roethlisberger and William Dickson.[23] Social distance is created by gaps in intimacy and interest, which Polaris shrinks by granting investors increased access to company details and maintaining constant guidance with the boards of portfolio companies.[24] Polaris also illustrates this concept by mentoring early-stage startups at their subsidiary Dogpatch Labs.

See also

References

  1. ^ a b c d Polaris Venture Website: Who We Are
  2. ^ "Team". Polaris Venture Partners.
  3. ^ "Team". Polaris Venture Partners.
  4. ^ Edwards, Richard. Contested Terrain: The Transformation of the Workplace in the Twentieth Century. New York, NY: Basic Books, Inc Publishers.
  5. ^ Edwards, Richard. Contested Terrain: The Transformation of the Workplace in the Twentieth Century. New York, NY: Basic Books, Inc Publishers.
  6. ^ "Team". Polaris Venture Partners.
  7. ^ "Team". Polaris Venture Partners.
  8. ^ "Team". Polaris Venture Partners.
  9. ^ "Team". Polaris Venture Partners.
  10. ^ Smith, Adam. (1776). The Wealth of Nations: Books I-III. Baltimore: Penguin Books.
  11. ^ Smith, Adam. (1776). The Wealth of Nations: Books I-III. Baltimore: Penguin Books.
  12. ^ Edwards, Richard. Contested Terrain: The Transformation of the Workplace in the Twentieth Century. New York, NY: Basic Books, Inc Publishers.
  13. ^ "Team". Polaris Venture Partners.
  14. ^ Edwards, Richard. Contested Terrain: The Transformation of the Workplace in the Twentieth Century. New York, NY: Basic Books, Inc Publishers.
  15. ^ Graham, Laurie. (1993). Inside a Japanese Transplant: A Critical Perspective. Work and Occupations, 20, 147-173
  16. ^ Graham, Laurie. (1993). Inside a Japanese Transplant: A Critical Perspective. Work and Occupations, 20, 147-173
  17. ^ Taylor, Frederick W. Scientific Management. The Sociology of Organizations", 55-66
  18. ^ "Focus/@dogpatchlabs". Polaris Venture Partners.
  19. ^ "Polaris Venture Partners". Polaris Venture Partners.
  20. ^ "Team". Polaris Venture Partners.
  21. ^ "Focus/@dogpatchlabs". Polaris Venture Partners.
  22. ^ "Focus/@dogpatchlabs". Polaris Venture Partners.
  23. ^ Roethlisberger & Dickson, Human Relations. The Sociology of Organizations", 67-83
  24. ^ Roethlisberger & Dickson, Human Relations. The Sociology of Organizations", 67-83
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