Charles River Ventures recently held a $186 million first close on its 13th fund, with a final close of just over $275 million scheduled to occur in March.
CRV raised $250 million for its 12th fund in December 2003, but didn’t start investing from it until the following July. The bi-coastal firm then began making disbursements at a fairly steady pace, and eventually targeted Q1 2007 as the start date for its next fund-raising drive. But deal pace slowed in early 2006, which prompted CRV to push back its target to Q3 2007.
Then, just as swiftly, deal pace sped up. In fact, CRV began worrying that it could soon run out of new investment dollars. The situation became acute in October when it became clear that the accounts would be dry by mid-January. The firm explained the situation to limited partners during its annual meeting in November, and sent out private placement memorandums with a $275 million cover price by the second week of December. In its pitch, it asked as many LPs as possible to make commitments by year-end, with the understanding that some investors would need to wait until 2007 because of calendar allocation issues.
Not only was the process accelerated, but the restrictions were fairly tough. CRV put a $12.5 million cap on all LP commitments to accommodate as many LPs as possible. This was the same ceiling it had used with its $250 million Fund XII, with the extra $25 million in wiggle room used to help certain LPs increase their stakes closer to $12.5 million. For example, certain LPs with $3 million commitments to Fund XII got to put $5 million into Fund XIII.
CRV continued its band on public pensions, but only in part due to Freedom of Information Act issues. The bigger issue, according to sources, is that CRV simply has more LP interest than it can handle. CRV raised $1.2 billion for a fund in early 2001, and then made severe LP cuts to raise subsequent vehicles below $300 million. Public pension funds were among those cut, but they were not the only ones.
The primary partners in CRV’s newest fund are Izhar Armony and Bruce Sachs in Waltham, Mass., and Bill Tai and George Zachary in Menlo Park, Calif. Chris Baldwin will not be participating on Fund XIII, but will continue to honor his Fund XII commitments (including board seats). —Dan Primack