WELLESLEY, Mass. – Battery Ventures, founded in 1983, targets high technology companies, primarily in the communications and software industries. While the firm mainly focuses on the United States, it has made investments in Israel and currently is reviewing other opportunities abroad, General Partner Thomas Crotty said.
Most investments are made in early-emerging companies, but start-ups and later-stage companies are also considered. The firm typically seeks companies with a finished product and some revenue but in need of capital to accelerate its sales and marketing efforts. Battery prefers to be the deal originator, serving as the first institutional investor in 80% of its portfolio companies.
“As opposed to a lot of people in the industry, we believe that the market opportunity and a company’s ability to position itself for being a market leader” is more important than a strong management team when assessing an investment opportunity, Mr. Crotty said.
Battery invests between $5 million and $15 million in individual companies with an average investment of $7 million to $8 million. The firm’s partners usually take a board seat.
Battery has about a dozen associates and analysts pursuing investment opportunities.
The firm is affiliated with The Yankee Group, a high-technology market research firm based in Boston, which augments Battery’s research capabilities and market expertise and helps with due diligence, Mr. Crotty said.
The firm’s first three funds are fully invested. Its current vehicle, the $200 million Battery Ventures IV, closed in 1997 and will be fully invested during the first quarter. Its fifth fund already is oversubscribed at $400 million, Mr. Crotty said. All the firm’s vehicles have performed in the top quartile of the industry, according to the firm.
Limited partners include private pensions such as Bell Atlantic Corp., General Motors Investment Management Corp. and JC Penney Co.; public pensions such as San Francisco City & County Employees’ Retirement System, State of Michigan and Virginia Retirement System; advisers such as Brinson Partners, Pathway Capital Management and HarbourVest Partners, L.L.C.; as well as foundations and endowments, including Duke University, Harvard Private Capital, University of Washington and University of Michigan.
Battery Ventures’ managing partners are Robert Barrett in the firm’s San Matteo, Calif., office and Richard Frisbie at the Wellesley, Mass.-based headquarters; general partners are Oliver Curme, Thomas Crotty and Todd Dagres in the Wellesley office, and Kenneth Lawler in San Mateo. The firm will hire two vice presidents and two associates during the first half of 1999.
Select Battery Ventures portfolio companies include:
Akamai Technologies Inc. (Cambridge, Mass.) provides Web content distribution services.
Polaris Venture Partners is co-investor.
Allegiance Telecom Inc. (Dallas, Texas) is a competitive local exchange carrier (CLEC).
Frontenac Co., Madison Dearborn Partners Inc. and Morgan Stanley Venture Partners are co-investors.
AssetWorks Inc. (San Antonio, Texas) provides facilities management maintenance software.
Austin Ventures, L.P. is co-investor.
Aurigin Systems Inc. (Mountain View, Calif.) provides intellectual property management software.
Technology Crossover Ventures is co-investor.
Brooktrout Technology Inc. (Needham, Mass.) is a provider of voice and fax messaging systems.
Convergent Networks Inc. (Tewsbury, Mass.) produces telecommunications equipment for CLECs.
Co-investors are Matrix Partners and North Bridge Venture Partners.
EC Cubed Inc. (Wilton, Conn.) produces business-to-business electronic commerce application components.
BancBoston Capital/BancBoston Ventures, Crystal Internet Venture Fund, L.P. and Walden Group of Venture Capital Funds are co-investors.
FlowWise Networks Inc. (San Jose, Calif.) develops router expansion and acceleration products.
Co-investors are Alta Partners, Venrock Associates and TL Ventures.
FORE Systems Inc. (Pittsburgh, PA) manufactures ATM-based networking switches and adapters.
Patricof & Co. Ventures Inc. is co-investor.
InformationView Solutions Corp. (Rochester, N.Y.) provides intercarrier billing reconciliation software.
Bessemer Venture Partners is co-investor.
Level 3 Communications Inc. (Omaha, Neb.) is a nationwide Internet Protocol-centric telecommunications carrier.
Matrix Partners is co-investor.
NextNet Technologies (Boca Raton, Fla.) manufactures fiber-optic communication equipment.
Open Port Technology Inc. (Chicago, Ill.) provides client-server fax software.
Frontenac Co., New Enterprise Associates and CID Equity Partners are co-investors.
Packet Engines Inc. (Spokane, Wash.) develops gigabit ethernet switching products.
Mayfield Fund is co-investor.
Personic Software Inc. (Brisbane, Calif.) provides client-server recruiting software.
BancBoston Capital/BancBoston Ventures and Technology Crossover Ventures are co-investors.
Pixelworks Inc. (Tualatin, Ore.) develops and distributes digital computer displays and controllers.
Sequoia Capital is co-investor.
Systems Center Inc. (Reston, Va.) provides communications software for IBM mainframes.
Co-investors include Weiss, Peck & Greer Venture Partners, L.P.
UNIsite Inc. (Tampa, Fla.) provides site management services for wireless communications.
Providence Equity Partners Inc., Boston Capital Ventures, JK&B Capital and AT&T Ventures are co-investors.
Battery Ventures is located at 20 William Street, #200, Wellesley, Mass. 02481, tel. (781) 996-1000, fax. (781) 996-1001; 901 Mariner’s Island Boulevard, #475, San Mateo, Calif. 94404, tel. (650) 372-3939, fax. (650) 372-3930. Additional information on the firm can be found on the Web at www.battery.com.