NEW YORK – Bear Stearns Asset Management held a Christmas Eve final close on $101 million for Constellation Ventures, its first venture capital effort.
The fund, which was formed in 1997 and held a first close in March of last year, makes mid- to late-stage investments in new media and communications companies whose products interface with customers, said Doni Fordyce, chief operating officer of Bear Stearns Asset Management. There will be a particular focus on companies that offer intellectual property and create content for new media.
Since its first close, the fund has made five investments as both lead or co-investor. The investment strategy calls for the fund to invest between $3 million and $5 million in its first commitments to portfolio companies, and a representative from Constellation will take a board seat on most deals.
Clifford Friedman, a senior managing director at Bear Stearns, will manage the fund. Other senior members include Partner Ron Celmer, who joined the fund from Prospect Street Ventures, and Melissa Blau, who joined from Simon & Schuster. The fund has a board of strategic advisers that will approve any investments, and a Bear Stearns board must also approve all deals.
Ms. Fordyce declined to identify any of the 85 outside limited partners in the fund, but did say institutions comprised 80% of the L.P. base, with the balance coming from individual investors. The fund failed to attract much interest from pension funds, Ms. Fordyce said, noting that the majority of institutions were corporate investors with a strategic interest in the communications industry.
Bear Stearns committed to Constellation Ventures as a limited partner, Ms. Fordyce said.
Fees for Constellation Ventures include a 2% annual management fee and 20% of profits. The fund was structured with an eight-year life, but Ms. Fordyce expects the group to deploy the money in two to three years.
“This fund could be the first in a string of these things,” Ms. Fordyce said.