Fund briefs, September 2007

Bessemer raises $1B, plans India push

Bessemer Venture Partners announced last month that it has raised more than $1 billion in closing Bessemer Venture Partners VII. The Larchmont, N.Y.-based firm says that the oversubscribed fund includes $350 million that is earmarked for investments in India. Bessemer opened its offices in India three years ago and has invested in 12 Indian companies to date.

In connection with the fund, Bessemer has boosted its India investment team by adding Partners Anil Sarin, former co-head of equities at Prudential ICICI Asset Management, Sridar Iyengar, former chairman and CEO of KPMG India and former president of TiE, Mandeep Khaira, former senior executive of Dell India, and Yagnesh Sanghrajka, former global CFO of HTMT, a subsidiary of the Hinduja Group.

“India has been an exciting investment opportunity for us,” says Rob Chandra, a managing partner at Bessemer. “Just as we saw the long-term opportunity when we went to Silicon Valley in the 1970s, we see a similar opportunity in India driven by the growth in middle class prosperity and innovation.”

Bessemer raised the $1 billion from such LPs as its longstanding investor Bessemer Securities Corp., the Phipps Family Office. New limited partners include leading family offices, universities and foundations, the firm says.

Highway 12 fills up with $75M

Highway 12 Ventures announced that it has raised $75 million for Highway 12 Ventures II. The new fund will continue the Boise, Idaho-based firm’s strategy of making early stage investments in the states of Colorado, Idaho, Montana and Utah. The firm typically invests between $250,000 and $3 million in a first round and up to a total of $5 million in each of its portfolio companies.

In addition to the repeat participation of all fund I investors, including the Public Retirement System of Idaho, new institutional investors include the Montana Board of Investments, Darwin Ventures and the Utah Fund of Funds.

Highway 12 Ventures has made four investments from fund II, including an investment alongside Benchmark Capital and Shasta Ventures in Logoworks, a Lindon, Utah-based provider of logo design services for small businesses. In April, Hewlett Packard announced that it would acquire Logoworks for an undisclosed price.

Highway 12’s first fund, a $25 million vehicle raised in 2001, invested in 11 companies, including @Last Software, a provider of 3D design software acquired by Google last year, Attensity, a developer of text analytics, and OpenLogic, which offers support and services for open source projects.

DFJ reaches into U.K.

Draper Fisher Jurvetson added Esprit Capital Partners to its affiliate network in August, acquiring a “strategic stake” in the London-based venture fund for an undisclosed amount.

DFJ will re-branded the firm as DFJ Esprit, with existing DFJ partners joining Esprits’ investment committee. Esprit currently manages $560 million in two funds.

“We are partnering with Esprit to find and help build the most exciting new companies from Spain to Scandinavia,” John Fisher said in a prepared statement.

Hopes for a pan-European investment fund may be more focused on the future of the fund than its track record would seem to indicate. More than 80% of Esprit’s investments are U.K.-based. Another 10% of the fund has been invested in U.S.-based companies.

Still, the firm has had a hand in several successful investments. It backed software maker KVS, which was sold to Veritas for $225 million in 2004, video-processing semiconductor designer Alphamosaic, which Broadcom bought for $123 million in 2004, and chip designer Fillfactory, which Cypress Semiconductor purchased for $100 million in 2004.

Piper Jaffray eyes fourth fund

Piper Jaffray Private Capital is merging its clean technology fund of funds with its main fund of funds for its next vehicle, which is coming to market shortly.

Before that, however, the firm is close to wrapping up Piper Jaffray Private Equity Partners III, which the firm anticipates closing on Sept. 30 with $250 million. The fund will invest in venture, buyout and distressed funds managers.

Meanwhile, Piper Jaffray Private Capital, an arm of Minneapolis investment bank Piper Jaffray, is moving ahead with a successor fund of funds, according to one source. With that vehicle, investors can choose whether to back venture funds, cleantech investments, direct investments or buyout firms, the source said.

Adding cleantech to the main fund of funds is a new twist for Piper Jaffray Private Capital. Earlier this year, the firm closed on a $60 million cleantech-only fund of funds, Piper Jaffray Cleantech Ventures, which is already fully committed. The firm decided to blend its next cleantech fund into a diversified private equity fund of funds because LPs want more diversity, the source says.

Piper Jaffray Private Equity Partners IV does not yet have a target size. The fund of funds plans to back 10 cleantech managers, of which five have already been identified, including fund VIII for Technology Partners, which is targeted at $250 million.

Flag nears close of $400M FoF

FLAG Capital Management, which has its roots backing venture funds with family office money, is ready to close on a third private equity fund of funds. The pool is earmarked for about 20 managers, largely buyout firms. Early this summer, the firm had raised at least $350 million for the fund, which has a $400 million target. A spokeswoman for FLAG declined to comment.

FLAG Capital has already agreed to commit to invest in funds raised by New York-based Cerberus Capital Management; Boca Raton, Fla.-based Sun Capital Partners; and San Francisco-based tech buyout specialist Golden Gate Capital.

Co-founding FLAG Capital in 1994 were Diana Frazier, who previously spent nine years with BancBoston Ventures, and Peter Lawrence, who previously spent 12 years managing private equity portfolios for the Marshall Field family office. “FLAG” stands for “Frazier, Lawrence and the Gang.”

Siemens invests in Galen

Galen Partners, a Stamford, Conn.-based health care investor, announced recently that Siemens Venture Capital GmbH has invested in its fifth fund, Galen Partners V. The fund, which closed this summer, has now raised $250 million in partner commitments. Fund V will focus on investments in health care information technology and outsourcing, medical devices, and specialty pharmaceutical companies.

CMEA sets sights on $400M

CMEA Ventures of San Francisco is raising up to $400 million for its seventh fund, according to a regulatory filing. Park Hill Group is serving as placement agent. CMEA raised $300 million for its sixth fund in 2003.

Long River banks on $40M

Long River Ventures is raising up to $40 million for its second fund, according to a regulatory filing. It already has secured more than $16 million in commitments from limited partners, such as Mass Mutual. Hadley, Mass.-based Long River focuses on early stage companies in central and western Massachusetts. —VCJ staff