LOCUST VALLEY, N.Y. – Amid an ongoing convergence of the Internet and health-care services, Dauphin Capital Partners recently wrapped a 13-month fund raising effort for its first fund at $30 million.
“A year ago, I would have expected [the fund] to focus on the traditional medical service industry,” said James Hoover, founder of Dauphin Capital. “Now, we are seeing more deal flow coming from the Internet providing health-care solutions.”
Unlike consumer-driven e-commerce companies, Web-based health-care solutions lean toward business-to-business and security concerns rather than consumers. Hoover said administrative costs are estimated to account for more than $300 billion of total health-care expenditures annually, which creates opportunities for Internet companies.
Limited partners in Dauphin Capital Partners I L.P. include lead investor Citicorp Venture Capital, The Finova Group, GE Capital, Raymond James Financial, Needham & Co. and more than 20 individuals from the health-care sector.
Hoover said the fund will seek companies that received primary funding from individuals and have reached the point where new partners are needed to support expansion. The firm, however, also has the option to invest in private equity placements of small public companies.
Dauphin has invested in four companies since holding a first close in July 1998. The investments to Baseline Medical Inc., HealthStream Inc., XCare.Net Inc. and publicly traded Ramsay Youth Services Inc ranged from $600,000 to $2.5 million, leading the fund to call down approximately 30% of the total capital. Hoover said future deals will be in the $2 million to $3 million range.
The firm will consider rounds as large as $25 million with co-investments from its limited partners, he added.