SANTA BARBARA, Calif. – One year after launching a $25 million venture capital fund to invest in Internet start-up companies, Bertelsmann Ventures in July raised an additional $50 million from media company Bertelsmann AG, its sole limited partner.
“We will look into taking more external partners when we raise additional funds,” said General Partner Jan Buettner. “At this point, Bertelsmann did not want to include other partners in the fund.”
The additional capital will allow the fund to invest in late-stage venture opportunities, although the firm will still focus on seed and first-stage deals, Buettner said.
“With a $75 million fund, we will get into second round deals to diversify our portfolio,” he said. “But I don’t want the money to cause investment stress, where we make not-so-wise decisions just to get rid of the money.”
Buettner added that Bertelsmann Ventures has been approached by several corporate investors about raising a second fund, which would exceed $100 million, and said the firm would likely do so in the next 18 months.
Bertelsmann Ventures is an independent fund with only loose ties to its parent company, Buettner said. The fund’s investment strategy is not limited by the new media strategy of Bertelsmann AG, which is the world’s third largest media company.
“We can bring all of the benefits of the Bertelsmann network to start-up companies,” he said. “But they are not burdened with corporate duties or discussing company strategy with our limited partner.”
Bertelsmann Ventures committed most of its initial $25 million to five portfolio companies, including electronic book distributor NuvoMedia Inc. and Onelist Inc., a service that provides free e-mail communities.
The fund invests $3 million to $8 million in a company throughout the course of an investment, and seeks to own at least 10% of a company at the time of a public offering. While the fund’s minimum investment size for early-stage venture deals is $2 million, Buettner said approximately 10% of the fund is allocated for seed investments in European-based companies. Buettner sits on the board of all the fund’s portfolio companies.
Prior to forming Bertelsmann Ventures, Buettner was president and Chief Executive of AOL Germany, a joint venture between Bertelsmann and America Online Inc. He also serves as a financial consultant to Bertelsmann CEO Thomas Middelhoff, and has declined an opportunity to join the company’s board of directors.