CHICAGO – Apex Investment Partners expected a $160 million final close in December for Apex Investment Fund IV, following a $157 million fourth close one month earlier, said George Middlemas, a managing general partner at the firm.
Apex launched the $100 million-targeted fund in September 1998 (VCJ, October 1998, page 17), holding a first close in June on $50,000, a second close on $102 million in early September and a third close on $142 million later that month. The firm will invest in 30 to 40 early-stage companies that focus on telecommunications, information technology, software or consumer services. Investments will range from very small seed deals to $7 million roll-ups, with average investments around $5 million, Middlemas said.
No Problem Fund Raising
The vehicle, at press time, had backed three deals, and the firm expected the fund to be completely invested or committed within three to four years. Apex leads about 70% of its deals and is frequently the sole investor.
The $58.8 million Apex III closed in fall 1997 and invested in 23 companies. The fund netted a 66.3% net-to-limited internal rate of return and its predecessor, Apex II, earned a 38.8% IRR.
When it came to fund-raising, the high volume of venture activity made it difficult for Apex to schedule appointments with potential limited partners, Middlemas said. The market was “really receptive to unproven funds,” which added to the competition, he said, but things went smoothly once discussions got underway.
Existing limited partners include Sovereign Financial Services’ fund-of-funds and the Washington State Investment Board, which were joined by some newcomers including Nationwide Insurance, New Mexico State Investment Council, Pennsylvania State Employes’ Retirement System, Pfizer Inc. and First Chicago Investment Corp., among others.
Apex’s six-member advisory board is made up of James Kimsey, founder and chairman emeritus at America Online Inc., Leonard Kleinrock, a computer science professor at the University of California, Los Angeles, Jerre Stead, chairman and chief executive officer at Ingram Micro Inc., Donald Phillips, president at Forstmann-Leff International and entrepreneurs Richard Earnest and George McQuilken.
The firm’s investment team is led by Managing General Partner James Johnson, General Partners Lon Chow and Babu Ranganathan, and Middlemas.