WOODCLIFF, N.J. – In the latest example of dotcoms luring investment banking professionals away from Wall Street, Pat LaVecchia left Credit Suisse First Boston’s private equity group in late February to join business accelerator Hawk Holdings.
At CSFB, LaVecchia served for three years as the head of global corporate private equity placements, and before that he had worked at Bear Stearns & Co. since 1995 in private equity. LaVecchia estimated that he raised $1.7 billion in more than 50 deals since 1995. Earlier in his career, he worked on cross-border mergers and acquisitions at Kleinwort Benson.
“I see this position leveraging what I’ve been doing with VC firms,” LaVecchia said. “This is not competition [for VCs]. We will work with them.”
Hawk Holdings was formed at the end of 1999 as a joint venture between Scott Baxter, the former chief strategy officer of Qwest Communications, and Qwest.
Baxter said the venture has been funded entirely by those two parties, although he said the company, which is being structured as a holding company, expected to close a strategic financing as early as March and would launch a larger equity round later in the year that would be in the $50 million range. He emphasized that the company would not operate under a limited partnership structure, opting instead to structure itself according to a holding company pattern.
Holding Company Status
“We are not VC … our long-term goal is to market-proof our strategy,” Baxter said. “Over time, we want to end up looking like General Electric, where we are a big holding company in the [Internet] industry which has steady growth.”
To maintain its holding company status, Hawk Holdings will acquire majority stakes in all of the companies it supports. Baxter said the company would evaluate three areas of each company it considers for the venture. The first requirement is that the concept behind the company operate on solid business fundamentals, that it make sense financially and finally, that the company have a hook.
“At the end of the day, we look for a hook,” Baxter said. “The company might bring that, or we might add it, but there has to be a hook.”
As an example of this, Baxter cited a company that has been accepted based on its technology hook. Hawk Holdings has an exclusive agreement to a search technology that was developed at a major university, but all the university had was the technology. The team at Hawk will add the rest of the business, because the school lacks those resources.
Hawk will work with Internet companies like this that have a hook but need other ingredients in order to get to market and succeed. In addition to LaVecchia, Baxter has staffed the venture with senior executives from Comdisco Ventures, EDS, Geocapital Partners, Qwest and two consulting professionals. The team currently consists of 10 professionals.
“My role will be to work on structuring deals, investing and taking board positions,” LaVecchia said.
A spokesman for CSFB declined to comment on the steps the firm would take to replace LaVecchia in the private equity group.