SAN FRANCISCO – Venture Strategy Partners, the venture arm of brand-consulting firm Venture Strategy Group, held a $25 million final close in March on its first fund.
Targeted at $40 million when it was launched in late 1997 (VCJ, October 1998, page 22), the firm later cut its goal in half when it was decided that Joanna Gallanter would be the general partnership’s sole full-time fund manager.
Bill Rosensweig, a Venture Strategy Group managing director, had initially been slated to join Ms. Gallanter as a manager, but his commitments as a consultant for the company placed limits on the time he could devote to the fund, Ms. Gallanter said. As a result, Mr. Rosensweig’s role in Venture Strategy Partners will be reduced to that of a venture partner. Others are Tony Kamin, a Chicago investor, and Bill Hambrecht and Bob Hambrecht, the father and son team who spearheaded San Francisco’s W.R. Hambrecht + Co. investment bank (VCJ, March, page 5), Ms. Gallanter said.
Venture Strategy Partners L.P. (VSP) will use a dual investment strategy, backing seed- and early-stage Internet companies, as well as later-stage companies in other businesses. Venture Strategy Partners looks at deals in technology, business services, health-care and consumer sectors, investing at “the nexus of brand and technology.” In all cases, the firm looks for opportunities to assist portfolio companies by using Venture Strategy’s expertise in building brand names.
VSP anticipates making 15 to 20 deals from its inaugural fund, putting an average of $1 million to $2 million into each company.
The firm realized early on that institutional investors were not likely to back the fund because it was a first-time effort and because its size was small. Instead, VSP attracted angel investors, venture firms, buyout firms, individual VCs and chief executives who will be able to help the firm with deal scouting, due diligence and who can add support to portfolio companies with their professional knowledge, Ms. Gallanter said.
Limited partners include Brentwood Venture Capital, Catterton Partners, and individual investment professionals from Brentwood, JW Childs Associates and U.S. Venture Partners. Jeff Braun, founder of Maxis, the maker of the computer game Sim City and Dan Kranzler, founder of McCaw Cellular Communications, now known as AT&T Wireless Services, also backed the fund.
VSP held a first close about a year ago on $5 million. Ms. Gallanter explained that many venture firms claim to be raising a first fund, but do not complete the task. VSP locked up the $5 million to “get out of that noise,” she said.