BOSTON – M/C Venture Partners, one of two new venture firms spun out of Media/Communications Partners, closed in January on $230 million.
Although all limited partners had committed by early December, the firm held a two-part close – one in December and one in January – to allow some L.P.s to invest from their 1999 allocation, explained General Partner James Wade. Affiliate funds made up of capital from entrepreneurs, friends of the firm and general partners added another $20 million to the total. The vehicle was raised entirely from former backers of Media/Communications Partners, which last year split into two groups focusing on different stages of investments (VCJ, January, page 18). M/C Venture Partners consists of general partners David Croll, Peter Claudy and Mr. Wade and Principal Matthew Rubins.
M/C Venture Partners predominantly will back early-stage companies, mostly in telecommunications networks and information-technology services related to those networks.
The group is looking for a partner to focus on the IT-services area and plans to hire an additional analyst and associate.
Limited partners include the Richard King Mellon Foundation, Sterling Grace Capital, California’s teachers’ and public employees’ pensions, the Pennsylvania State Employes’ Retirement System, the Hillman Family, the endowments of Yale University, University of Notre Dame, Cornell University and Columbia University and funds-of-funds managers and investment advisers.
Split Causes Bemusement
Arthur Miltenburger, Richard King Mellon Foundation’s vice president for alternatives, said his organization had participated in prior Media/Communications funds, and while he was at first “bemused” by the split of the firm, Mr. Croll reassured him about M/C’s future.
Although Mr. Miltenburger had been pleased with previous Media/Communications funds, he doubts the foundation will back Great Hill Partners, the other firm that spun out of Media/Communications Partners (story page 22). Great Hill is run by Christopher Gaffney, John G. Hayes and Steve Gormley and focuses on later-stage durable media investments.
“I’ve known David Croll for a long time, and that’s who I’m really involved with here,” Mr. Miltenburger explained. When Media/Communications split into M/C and Great Hill, he feared Mr. Croll might retire. “As long as David stays active in the business, I want to invest with him.”
The California State Teachers’ Retirement System (CalSTRS) took part in two earlier Media/Communications funds and invested in M/C IV “because we thought they were good,” said Director of Alternatives Real Desrochers. It was too early to say whether the pension would back Great Hill, he said.
Abbott Capital Management backed M/C IV, having also invested in previous Media/Communications vehicles, said Managing Director Stan Pratt. Like CalSTRS, Abbott was unsure whether it would back Great Hill.
“We like them,” Mr. Pratt said of the Great Hill investment professionals. Nevertheless, that fund has a later-stage IT focus, and Mr. Pratt wonders whether reasonably priced deals can be had in that segment of the venture business.