ePlanet goes solo, seeks $550M

EPlanet Ventures, a former affiliate of Draper Fisher Jurvetson, has launched a fund-raising drive for a $550 million fund, its first since it parted ways with DFJ at the beginning of the year. The firm expects to close the fund during the first quarter of 2007.

EPlanet was launched in 1999 when Asad Jamal approached DFJ’s Tim Draper with the idea of forming a fund that would focus on startups based outside the United States. Draper was anxious to get involved in the globalization trend, even in 1999, when the next billion-dollar-opportunity could be found during a pitch meeting at a morning breakfast at Buck’s of Woodside. At the time, Draper was investing from DFJ’s fifth fund and was prevented from actively investing abroad, based on the LP provisions in his fund agreement. So he lent his firm’s name to Jamal, a former investment banker, and helped him raise a $650 million fund in 2000.

EPlanet’s role as the international investor for the DFJ affiliate network paid off in a big way for both parties. Draper used ePlanet’s fund to invest in Skype Technologies, a Luxembourg-based VoIP company that he had become involved in through Draper Richards, his father’s firm. Draper was also a partner in the DFJ ePlanet fund and sat on the board of Skype. Then eBay bought the startup in 2005 for $2.5 billion.

Skype yielded impressive returns to everyone involved. But perhaps more impressive was the payoff from ePlanet’s deal activity in China. The firm was an early backer of Internet search company Baidu.com Inc. (Nasdaq: BIDU), which raised $110 million in its August 2005 IPO. At the time, it was the most successful first-day foreign IPO in U.S. market history as the shrae price rose $95.54 or 354% on the first day of trading on the exchange. The stock was still trading at more than $100 per share in mid-November.

EPlanet also invested in the advertising company Focus Media (Nasdaq: FMCN) and the mobile services company Kongzhong (Nasdaq: KONG). Focus Media raised $171 million through a July 2005 IPO. Kongzhong raised $100 million through a July 2004 IPO.

The next fund of ePlanet may not be as strong in China. Not only does it face greater competition from more U.S. investors, but the firm also lost two of its star Chinese investors. Jixun Foo joined Granite Global Ventures in November 2005 as a managing director, and Fan Zhang also left ePlanet last year to become a founding managing partner of Sequoia Capital China. Both investors were involved with Baidu and Focus Media.

The firm, which is based in Redwood City, Calif., also maintains offices in London and throughout Asia. It currently employs 26 investment professionals, according to its website.

The firm isn’t the first to split from DFJ. Other DFJ affiliates that have parted with the firm this year include Draper Atlantic Ventures and DFJ New England. The two left the network to combine into an independent entity and plan to raise a $200 million fund under the name New Atlantic Ventures. DFJ still counts 12 affiliates in its fold.

Profile: ePlanet Ventures

www.dfjeplanet.com

Founded: 1999
Headquarters: Redwood City, Calif.
Other offices: London, Singapore, Tel Aviv, Hong Kong, Japan and Beijing
Fund name: ePLanet Ventures II
Fund target: $550M
Currently under management: $650M
LPs: NA
Management: Asad Jamal serves as co-chairman and managing director of ePlanet Ventures. He leads the U.S. Europe and Asian offices. Jamal serves on the board of Baidu, Intrapace Inc., IXI Mobile Inc. and Visto Corp.
Focus: In Europe and Asia, the firm invests in early stage tech and medical device startups. In the U.S., it invests in expansion stage tech and medical device companies.
Exits: The firm’s exits include Baidu.com (Nasdaq: BIDU), the Chinese search engine that launched a $110M IPO; Skype Technologies Inc., the VoIP service provider that was acquired by eBay in 2005 in a transaction valued at up to $4.1 billion; Focus Media (Nasdaq: FMCN), the Chinese flat-screen delivery commercial advertiser that went public last year; Kongzhong (Nasdaq: KONG), a wireless communications company; Cyanea, which was acquired by IBM; and LongCheer, the Chinese handset designer that listed in Singapore in 2005.