Vanguard Ventures lost one of its three remaining partners in October, but is not yet ready to throw in the towel. Instead, the Palo Alto, Calif.-based firm hopes to generate liquidity from existing portfolio companies, and then raise a new fund in early 2008.
Vanguard entered 2005 with five general partners: Dan Eilers, Tom McConnell, Bob Ulrich, Don Wood and firm co-founder Jack Gill. Ulrich and Gill both announced their pending retirement in preparation of an eighth fund-raising drive, which was designed to raise $125 million (Vanguard VII raised $240 million in 2000).
LPs, however, balked at a noticeable lack of positive exits and substantial write-downs. Vanguard VII was 68% drawn down at the end of Q1 2005, but had lost more than 50% of its portfolio carrying value, according to a public document from Private Equity Investor PLC. The situation worsened one year later, with 73% called down and a carrying value that was off 57.2 percent.
We made the decision as a firm to gain greater liquidity from our current portfolio, and Don [Wood] is going to help us do that … even though he’ll be at DFJ.
Tom McConnell, General Partner, Vanguard Ventures
Vanguard decided to suspend fund-raising, and refocus its efforts on salvaging the portfolio. In the meantime, certain Silicon Valley firms such as Benchmark Capital, began recruiting Wood. Then, in early October, Draper Fisher Jurvetson announced that it hired Wood as a managing director focused on building out the DFJ affiliate network. Vanguard said that Wood would remain involved with his existing portfolio companies, which include Casabi, Cooking.com, Konarka Technologies, Reflectivity, Sylantro Systems, Vocera Communications and ZipRealty.
“We made the decision as a firm to gain greater liquidity from our current portfolio, and Don is going to help us do that… even though he’ll be at DFJ,” McConnell says.
Vanguard currently has two portfolio companies in registration for initial public offerings—Asthmatx and Hansen Medical—and hopes to resume fund-raising in 2008. At that point, McConnell says that the firm would likely add at least one partner focused on IT and another on life sciences. It will be unable to promote from within, as it does not currently employ any associates or venture partners. —Dan Primack