Advantage Staffs Up, Reopens Fund

NEW ORLEANS – Advantage Capital Partners in November relaunched the firm’s first “traditional” venture fund under a new name and expects an initial closing around the beginning of the year.

The firm also hired Elliot Fishman to head its new New York office and was scheduled to recruit one or two investment professionals for its new office in Florida by the end of 1998 to cover deal flow on the eastern seaboard.

The firm’s latest vehicle, Advantage Capital Equity Partners IV, L.P., targeted at $150 million, originally was scheduled to launch in September as Advantage Capital Growth Fund, L.P. (VCJ, October 1998, page 18). However, a new name was selected based on advice from the firm’s Wall Street advisers, who said the word “growth” in the fund’s name could be confused with a mutual fund, according to Managing Director Crichton Brown. “The new name better reflects the product,” he said.

Fund-raising efforts appeared to be going well following the name change, with “very strong” response from investors, Mr. Brown said.

The fund will focus on later-stage investments in four areas: telecommunications and media; information technology and information systems; life sciences and medical diagnostics; and special situations. The vehicle’s regional focus will be on the Southeastern and Midwestern United States but the firm also will consider investments throughout the country, putting up as much as $10 million per deal.

The vehicle will target pension funds and endowments as limited partners, Mr. Brown said.

With the launch of the new fund, Advantage Capital Partners is moving into the field of “traditional” private equity investing. Until now, the firm had focused its investments in private, in-state companies in Louisiana and Missouri through its certified capital company (CAPCO) programs, which it plans to continue. Investors in these programs are mainly insurance companies that under state law get tax credits for their investments.

Advantage Capital Partners originally wanted to launch a mainstream venture fund in December 1997 under the name Advantage Capital Technology Fund, L.L.C., with a $100 million target. The effort was halted and the fund restructured a year later based on advice by existing investors and Wall Street advisers.

Mr. Fishman was hired as senior vice president to run the firm’s newly established New York office and to focus on early-stage investments in Internet businesses. He joined the firm from DoubleClick Inc., an Internet advertising company, where he served as director of product management. “He has another added skill set that will allow us to hone in on the Internet sector,” Mr. Brown said. Mr. Fishman said he would use his connections in the industry to help Advantage build its Internet portfolio in a hot market. “New York City is just booming,” he explained. “It’s just under everyone’s radar, but there are hundreds of businesses popping up, and there’s a lot of need for capital.” Mr. Fishman, who was a vice president of Technology Managemnet & Funding, L.P., a venture firm in Princeton, N.J., before joining DoubleClick, said he was happy to be a venture capitalist again. “The real excitement is building businesses,” he said. In the new job, “I can play with a bunch of different (start-up) companies rather than just with one.” Advantage’s New York office should be firmly established at the beginning of this year, Mr. Brown said.