SAN FRANCISCO – Axiom Venture Partners in mid-December announced the expansion of its investment team with the November addition of Marc Fogassa, as the firm’s only principal and second professional in its San Francisco office. The move came in advance of the firm’s late December close on its third fund, the $100 million-targeted Axiom Venture Partners III, said Linda Sonntag, a general partner with the firm.
Fogassa, formerly an associate with Atlas Venture, said he decided to join Axiom because he was given the opportunity to focus on communications products and components deals, which means he will be leading Axiom into a new investment sector.
“I thought the move was interesting from a personal perspective, because my investment focus is different now from what it had been at Atlas,” Fogassa said, noting “I now have the latitude in designing my own program in this area.” Fogassa focused on information technology and health-care deals at Atlas, where he worked from early 1999 to October 2000.
Prior to his time at Atlas, Fogassa spent a year working with Joseph McCullen Jr. at a venture firm Fogassa declined to identify. He described McCullen, who is now a managing director at Whitney & Co., as his mentor and a noted telecommunications investor.
Axiom, which backs IT and health-care companies, saw in Fogassa the right combination of talents for someone who the firm hopes will quickly advance to the rank of general partner, Sonntag said. “Axiom is expanding and with our third fund we wanted to bring in a tech specialist,” she said. “The fact that he had a technology and health-care background was great.” Fogassa’s responsibilities will be similar to those of the firm’s partners, she added, noting he will source deals, perform due diligence, structure deals and likely take board seats.
Fund III, which was launched in August of last year, has raised $85 million to date, Sonntag said. The firm is hoping to hold a final close later this month or in March, Sonntag said. The new vehicle will back approximately 25 to 30 companies with an initial investment size of $2 million to $3 million and a maximum of $5 million, she added. Some 80% of the fund’s capital will likely go toward technology companies, while the remaining 20% will back health-care companies.
Because the firm’s investment strategy involves exiting investments in 36 months, Axiom tends to focus on late-stage companies which are closer to their liquidity-events, Sonntag explained. However, the firm tends to invest in health-care companies at earlier periods in their development.
Axiom’s existing limited partners included Liberty Mutual Insurance Co. and Aetna Inc., which provided all of the capital for the firm’s first vehicle and 80% of the capital for Axiom’s second fund. High-net-worth individuals contributed approximately 20% of Fund II’s capital. Axiom has opened Fund III to institutional investors because Aetna and Liberty Mutual have already invested a substantial amount of capital with the firm and all three parties agreed Axiom needed new investors, Sonntag said, identifying Allianz of America Inc. as a new LP.
The new vehicle will be invested nationwide, Sonntag said. The fund has an 80%/20% carried interest structure and a 2.5% management fee, she added. Axiom will put up 1% of the vehicle’s total capital.
Axiom’s investment team now numbers five professionals: four general partners and Fogassa, Sonntag noted. Depending on how much capital Fund III ultimately raises, Axiom will likely hire an additional principal or associate, she said.