REDWOOD CITY, Calif. – Draper Fisher Jurvetson and three of the firm’s affiliated regional funds have certainly contributed their share to a venture market awash with fresh capital.
Timberline Ventures in Portland, Ore., Zone Ventures II in Los Angeles and Draper Atlantic in Reston, Va., three vehicles concentrating on emerging Internet hubs in their respective regions, all notched initial closes this summer. Meanwhile, Draper Fisher firmed up commitments from existing limited partners for its sixth fund.
“We’re going to try to have offices everywhere there’s a strong Internet presence,” said Draper Fisher Managing Partner Tim Draper, discussing what he calls the firm’s “network affiliate” model.
The firm established its network affiliate strategy early this year to better position itself for the regional deal flow in the increasingly competitive information technology market (VCJ, February, page 14). For instance, Timberline Ventures’ General Partners Bill Kallman and Jeffrey Tung hope to capitalize on the innovations developed by those trained at Northwestern technology companies such as Intel Corp. and Microsoft Corp. Draper Atlantic hopes to feed off deal flow stemming from Northern Virginia-based America Online Inc. and MCI Worldcom Inc., while Zone believes it can capitalize on the compelling new Internet content sites around Los Angeles.
The firm declined to comment on Draper Fisher Jurvetson VI or the firm’s relationship with Pittsburgh-based Triangle Capital Corp. Pittsburgh lately has been emerging as a technological hotbed (VCJ, August, page 5) and several sources have confirmed Draper Fisher’s decision to open an office there.
Three Separate Roads
Timberline, formed late last year and focused on the Pacific Northwest, in late July closed on more than $40 million, including commitments from Landmark Capital Partners’ fund-of-funds and the Oregon State treasury. The firm is targeting a $60 million final close and has a $75 million cap.
Timberline will concentrate on information technology deals of between $500,000 and a couple million dollars, Kallman said. The firm, however, has the ability to lead larger deals because of its affiliation with Draper Fisher.
“Investors have found the overall position of our strategy, our team and our venture network a competitive advantage,” he said. “We really see a great opening between angels and the larger funds.”
Draper Atlantic, another Draper Fisher affiliate, at press time was about to notch an initial close on its first fund, which would bring its total to $50 million. Partners John Backus and Jim Lynch will keep the vehicle open to new investors through September, but will not exceed a $75 million cap.
“We’ve got the money to do the deals we want, it’s just a matter of us being a larger fund,” Backus said, adding that investors were attracted to the opportunity to invest in a firm concentrating on Northern Virginia. “Most institutional investors don’t have good exposure to the region,” he said.
Zone Ventures is closing its second fund, its first vehicle raised from multiple limited partners. The firm in July collected $20 million from Samsung Electronics Co. and SunAmerica Inc., and expected to close on an additional $30 million to $55 million as early as mid-August. Times-Mirror Co.’s pension and the Los Angeles Community Development Bank are expected to commit to Zone’s second close.
The firm will concentrate on Southern California IT deals, particularly Internet-related plays. The Los Angeles area is ripe with content and design talent because “Hollywood tends to mentor people’s creativity,” said Frank Creer, a general partner of the fund.
Draper Atlantic has closed two deals, backing Fairfax, Va.-based Amazing Media and Herndon, Va.-based Single Surf, while Timberline and Zone II were each close to completing their first deals.