SAN FRANCISCO – Venture Strategy, known for its focus on branding companies, expects a final close at the end of February on its second fund, VS-2, targeted at more than $100 million, said Joanna Rees Gallanter, a founder and managing partner at the firm. The fund held a first close on $55 million in January.
VS-2 is slated to back about 15 early- to expansion-stage companies mainly in the Western United States with investments between $7 million to $10 million over several rounds of financing, Gallanter said.
Venture Strategy offers branding expertise – seeking those companies that will be a brand leader in a given sector – and backs business-to-business and business-to-consumer technology companies and dotcom spin outs that serve the consumer marketplace, Gallanter said.
The firm at press time was sealing three deals from its latest fund: $3.5 million in Chicago-based Recommender.com; $5 million in San Francisco-based BarterTrust; and $1.5 million in Washington, D.C.-based AdSavers.com Inc.
Venture Strategy’s inaugural fund, VS-1, which closed on more than $25 million in March 1999, is completely committed to 13 companies. The firm no longer backs pure business-to-consumer e-commerce companies, which was a main focus of Fund I because “We don’t believe there are many compelling opportunities still available,” Gallanter said, adding that the fund would consider backing dotcom spin-outs of existing B2C companies.
The firm operates what it describes as an accelerator practice program, which helps young companies mature to the point where they fit Venture Strategy’s investment criteria. The program works with about three to four companies each year, giving the venture firm inside access to first round investments.
Limited partners for the second fund include high-net-worth individuals who invested in Fund I, and they will be joined by some newcomers, mostly institutional investors including university endowments, fund-of-funds and corporations. The firm retains a 2.5% management fee and has a standard 80%/20% carried interest structure.
Gallanter, who founded the firm in 1996, has a background in consumer product marketing, having worked at Darcy Masius Benton & Bowles Advertising, where clients included Emery Worldwide, Texaco Inc., Hardees Restaurants and Bolla Wines. She works with Partners David Likins and Tony Conrad, who have been with the firm since January 1999, and Partner Matt Crisp, who joined the group in September 1999.
Venture Strategy will host the BuildBrandValue 2000 Conference in April, a forum for company leaders to explore brand-building activities.