Foster City, Calif. – BA Venture Partners in early April came to a final agreement with sole limited partner and parent Bank of America for the funding of its $500 million BA Venture Partners VI fund, said Kate Mitchell, the firm’s general partner. Bank of America has committed to provide the $500 million to the vehicle as the firm makes investments, she added.
Prior to this fund, BA Ventures had operated as the venture capital arm of Bank of America, receiving funding from the banking giant on a yearly basis since 1994. Mitchell said the firm received around $75 million dollars annually from the bank, documenting each allotment of capital as a separate fund. The decision to switch to a partnership format, with Bank of America becoming a limited partner, gives BA Ventures a multi-year commitment of capital to work with, Mitchell said. “This is a cleaner way to do things; it’s a larger commitment and shows the bank’s confidence in us for potential deal candidates,” she added.
The vehicle will back approximately 30 companies in the broadband, wireless communications, Internet software and services, business e-commerce and biotechnology industries. The average deal size will be approximately $15 million, which will be spread over several rounds of financing, Mitchell said. The fund will have the industry standard 80%/20% carried interest structure, Mitchell said. She declined to reveal the fund’s management fee, simply describing it as competitive with similar funds.
The fund will be biased towards backing early-stage companies, Mitchell noted. However, the vehicle will invest in companies at various stages of development and will focus on finding the best opportunities in a given sector, regardless of the company’s stage of development, she added, noting BA Ventures describes this approach as market focused and stage independent. “This is good in terms of getting the best opportunities in a given sector, and it provides our portfolio with a good balance between early-stage companies, which demand a lot of time, and later stage companies, which need attention but not in the same way or to the same degree,” she said.
Mitchell declined to reveal the firm’s rate of return for its previous funds, describing it as above the median return for the industry. The firm currently consists of nine investment professionals, including six general partners: Lou Block, Mark Brooks, John Dougery, Bob Obuch, Rory O’Driscoll, and Mitchell. The firm has plans to add three additional team members, including one general partner, over the coming months, Mitchell added.