WEST PALM BEACH, Fla. – CrossBow Ventures recently held a $70 million second close on CB Private Equity Partners LP and expected a final close on its $100 million target in mid-April, said Michael Yasi, managing director.
Launched in May 1999, the fund had a first close on $21 million one month later.
CrossBow also expecteds to receive an additional $60 million in two-to-one leverage from the Small Business Administration, because the firm is in the process of becoming a Small Business Investment Company.
CB Private Equity Partners is the only partner of Alpine Venture Capital, which will be capitalized with $30 million, from CB Private Equity Partners and $60 million in two-to-one leverage from the SBA. Yasi said this second vehicle was founded because of administrative issues concerning direct investments made by CB Private Equity Partners versus investments made with SBA money.
CB Private Equity will back approximately 35 Internet/e-commerce, telecommunications, health-care and environmental technologies companies, with average deal size ranging between $1 million and $3 million. The vehicle will make some follow-on investments committing up to $5 million in any one company. The general partners have invested 1% the fund’s value in the vehicle. Its management fee is 2%, and its carried interest structure falls under standard industry levels.
Yasi said fund raising for this first time fund has gone fairly well. “We have faced all the standard hurdles and barriers that new funds encounter when they try to raise money…but our investments to date have done well and that has certainly helped to impress later investors,” he said. The vehicle’s limited partners, who Yasi declined to identify, are a combination of institutional investors, high-net worth individuals and pension funds, about 75% of which are Swiss and the remaining 25% American.
The vehicle is targeting Swiss investors because one of its co-founders, Rene Eichenberger, is a native of Switzerland. “Many Swiss feel they are sort of behind the curve when it comes to venture investing, but they are willing to start doing some of the things we have been doing in this country for some time and they trust Rene,” Yasi said, adding CrossBow wants to open the door to venture capital for these investors.
The fund began as an early-stage investor and grew to include later-stage deals because of attractive second and third round financing opportunities. The fund’ focuses on the Southeastern United States, predominantly Florida, but will invest elsewhere and overseas.
CrossBow’s other co-founder is Stephen Warner, a former president and CEO of Merrill Lynch Venture Capital. Yasi declined to identify the vehicle’s general partners beyond Warner and Eichenberger. To date, the fund has made a total of 17 investments.