GREENWICH, Conn. – Brand Equity Ventures at press time was preparing the launch of its sophomore fund, Brand Equity Ventures II, which will target $200 million.
Like its predecessor, BEV II will back branded consumer companies including restaurants and retail shops, as well as business-to-business plays targeting small businesses and home offices, said Managing General Partner David Yarnell. The fund is expected to notch a first close by the end of the year. Management fees were still being determined at press time.
Along with a larger fund size and investment staff, the new fund’s average investment size also will grow. While BEV I invested $5 million to $8 million per company, Yarnell estimated BEV II would invest $7 million to $10 million per company over time. The firm will maintain its traditional focus on early-expansion stage companies, but also will continue to invest in some start-ups and buyouts.
Brand Equity will consider investments in Internet companies with functioning sites, as well as or retail or restaurant chains with three to five outlets in operation.
The group’s first fund had posted a 60.1% net internal rate of return as of June 30, including realized and unrealized gains. By press time, 29% of the fund’s paid-in capital had been returned to its limited partners and another 26% was in public stock to be distributed at the end of the lock-up period, according to data provided by Managing Partner Chris Kirchen.
Cyberian Outpost Inc., an on-line computer goods seller, and Alloy Online Inc., an apparel seller and e-commerce site for teenagers, are two BEV portfolio companies that have gone public.
The venture firm includes electronic commerce under its definition of consumer companies, and many of the first fund’s most recent deals were from that sector, including YourGrocer.com Inc., a Port Chester, N.Y. on-line service that delivers bulk goods, and Essential.com Inc., a company that sells essential services – telephone connections, natural gas and electricity – to home businesses.
The $95 million BEV I wrapped in the spring of 1997 and is about 80% invested, with one or two new deals yet to be made. The fund was managed by six investment professionals, including Yarnell and Kirchen, along with Vice Presidents Marc Singer and Bill Meurer, both of whom have since been promoted to general partners. Associate Josh Silberstein also was promoted to vice president. Meanwhile, the venture firm is the market for three additional vice presidents and three associates to oversee BEV II.