Five former partners of the VC unit of Mellon Financial Corp. have formed a new firm to purchase the assets of Mellon Ventures. Navigation Capital Partners officially opened its doors in Atlanta on Feb. 1.
The new firm (which has no relation to a defunct boutique bank of the same name) focuses on growth capital and lower-middle-market manufacturing, distribution and services opportunities in the Southwest and Mid-Atlantic regions. In addition to buying the Mellon Ventures portfolio, Navigation plans to raise a new fund, but it did not specify a size.
The firm’s two managing partners are Larry Mock, who founded and CEO of Mellon Ventures, and John Richardson, who headed the VC unit’s growth and buyouts practice. Three other Mellon Ventures execs joined Navigation: Mark Downs, Eerik Giles and David Panton.
Navigation purchased Mellon Ventures’ direct investment portfolio, which included 34 companies at a cost basis of $250 million. The names of the companies were not disclosed. Mellon Ventures’ website lists 25 portfolio companies, including two that are publicly traded and eight that have been acquired. Among those listed that are still private are ComputerJobs.com, an IT recruitment website, FullTilt Solutions, an Internet software developmer and consultant, and Mailnet Services, an online direct mail processor.
The purchase price for the Mellon Ventures portfolio is unknown, in part because Navigation owes Mellon Financial a small cut of positive liquidity events. Mellon is not paying Navigation any fees, however, except to cover legal bills related to one of the portfolio companies. Navigation has board seats or board observer rights on 22 of the 34 companies, and has capital for follow-on financing, if necessary. Mellon Ventures had invested $30 million in follow-on funding since it halted its direct investing in 2004.
Goldman Sachs acquired Mellon Ventures’ indirect portfolio, which consists of limited partner positions in third-party venture capital and buyout funds. Goldman Sachs also paid for most of Navigation’s acquisition, and is now Navigation’s cornerstone limited partner (for its existing portfolio and for a new fund the firm is raising).
Navigation did not provide any details on a fund-raising target, save for that it will be well in excess of the $150 million to $200 million or so that lower-middle-market funds typically raise. —Dan Primack