CHICAGO – Apex Venture Partners will begin raising its fifth fund, the $300 million to $350 million-targeted Apex Investment Fund V, in January, said George Middlemas, a managing general partner at the firm.
The firm plans to visit all of its existing LPs by year end, Middlemas said, adding that the new private placement memorandum will be in the mail by January, after year-end performance results have been determined. Without revealing identities, Middlemas said the firm has received preliminary commitments from a number of existing investors, and seeks to add another six LPs to its group.
The new fund will invest in about 25 to 35 companies, with initial investments in the $2 million range. Apex will invest heavily in subsequent rounds if it still views the company as a worthwhile investment. The firm places 70% to 80% of its capital in early-stage deals, while mitigating the risk with some later-stage investments, Middlemas said.
Apex mainly backs telecommunications, software, information technology and consumer-related companies throughout the U.S. “We are knowledge-based rather than geography-based,” he said. “We go where our knowledge takes us.”
By the end of the year, the firm expects to have some 70% of the $165 million Apex Investment Fund IV, and its $5 million side fund for strategic advisory board members, invested, Middlemas said. Apex will back a total of 25 to 30 companies before the fund is completely invested, he said.
Investments in the firm’s portfolio include Santa Clara, Calif.-based Exodus Communications Inc., which went public in March 1998; TRADEX Inc., which was acquired by Ariba Inc. in March; Celox Networks Inc., based in St. Louis; NETdelivery Corp., based in Boulder, Colo.; and Palo Alto, Calif.-based DigiLens Inc.
LPs in Apex funds have included Sovereign Financial Services’ fund-of-funds, The Washington State Investment Board, Nationwide Insurance, Pennsylvania State Employees’ Retirement System, Pfizer Inc. and First Chicago Investment Corp.
The firm plans to keep its existing 80%/20% carried interest structure and 2% management fee in place for the new fund, Middlemas said.
Investments are led by Managing General Partners James Johnson and Middlemas, and General Partners Armando Pauker, Wayne Boulais, Lon Chow and Babu Ranganathan. Johnson, ready to cut back on some of his responsibilities, will take a less active role in the new fund than he has in the past, Middlemas said, adding that the firm plans to hire another two investors after it closes its new fund.