Fund Briefs, November 2011

Psilos Group Looks to Raise $400M

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Psilos Group, a health care focused VC firm, is looking to raise $400 million with its latest fund, three sources say.

Psilos held a first close in December of roughly $50 million, one of the sources say. The target for fund IV is reportedly $450 million.

Founded in 1998, Psilos currently has $585 million under management. The firm raised $303 million for its third fund in 2007.

Psilos, which has offices in New York, Corte Madera, Calif., and Santa Fe, N.M., invests in health care services, health care IT and medical tech. The VC firm typically puts in from $8 million to $15 million per deal and expects to invest up to $20 million to $25 million over the life of an investment, according to the Psilos website.

“[Psilos has] had some nice exits over the past 12 months,” a banking source says.

“They have a long track record of investments in successful companies,” another banker says.

Psilos led a $30 million financing round for Mauna Kea Technologies in 2008. Mauna, which makes the world’s smallest flexible microscope, went public in France in July, raising about $70 million. Earlier this year, Psilos sold InSound Medical, a provider of extended wear hearing aids, to Sonova Holding for $169 million.

Officials for Psilos declined comment.

Luisa Beltran

Union Square Ventures Closes on $116M

Union Square Ventures has closed on more than half of a new, $200 million early stage fund, raising $116.5 million of fresh capital, according to a filing with the Securities and Exchange Commission.

Rumors of the close began to spread in mid-October, with two sources close to the company confirming the commitments. The SEC filing says another $83.5 million of the firm’s third early stage fund remains to be spoken for, though one source said it, too, has been sold. Sources say Union Square drew its capital from existing LPs with few if any new investors invited.

The apparent ease of the fundraising isn’t surprising given the success of Union Square’s first two early stage funds. Those funds invested in a number of notable Internet companies, including Twitter, Zynga (which is in registration for an IPO), Tumblr and Foursquare, among others.

Union Square Ventures 2004, a $125 million early stage vehicle, has an internal rate of return of 82.15%, according to a May 31 report from the University of Texas Investment Management Co., an LP in the fund. UTIMCO invested $22.2 million in the 2004 fund and Union Square has returned $39.8 million in cash. The cash and remaining value of the fund is $160.6 million, UTIMCO says.

Union Square Ventures 2008, which topped out at $156 million, sports an IRR of 19.98%, but that fund has not yet returned any capital, according to UTIMCO.

The news of the new fund comes just days after Union Square announced that Andy Weissman, a co-founder of Betaworks, joined the firm. The firm’s other partners are Brad Burnham, John Buttrick, Albert Wenger and Fred Wilson.

In addition to its early stage funds, Union Square last year raised $200 million for Union Square Ventures Opportunity Fund, which is focused on later stage investing. That fund has not returned any cash so far, according to UTIMCO.

Mark Boslet

TriplePoint Raises $1B Venture Debt Fund

TriplePoint Capital last month announced that it closed a $1 billion venture debt fund in one of the largest financings in the 25-year-old industry.

The 6-year-old firm said the new money will allow it to expand its debt and equity offerings as well as broaden its geographical presence. The Menlo Park, Calif.-based firm is considering opening offices in New York and London.

CEO Jim Labe said the firm is responding to what it sees as an increase in demand. The firm works alongside venture capitalists such as Khosla Ventures, New Enterprise Associates, Kleiner Perkins Caufield & Byers and Accel Partners, many of which have new growth capital to put to work.

Mark Boslet

Prospect Venture Partners Release LPs on Fourth Fund

Prospect Venture Partners, a biopharmaceutical and medical device investor founded in 1997, has released its limited partners from their commitments to its fourth fund after failing to reach its target of $250 million.

As initially reported by Venture Wire in early October, although Prospect had raised $150 million for Prospect Venture Partners IV, the firm decided that it “didn’t have sufficient capital and reserves to execute its strategy.”

Three of the partners from Prospect contact VCJ to say that their decision to not proceed with fund IV had nothing to do with their LPs being critical of their past performance. In fact, their most recent fund has performed better than comparable funds from other health care VCs, they said. And while some of the firm’s LPs urged Prospect to move forward with fund IV, the partners just didn’t feel it was the right thing to do.

“After extensive consideration, we concluded that it was in the best interests of our LPs to release them from their capital commitments to PVP IV,” the partners told VCJ via email.

Lawrence Aragon