BOSTON- Boston Millennia Partners held a $410 million final close in early June on Boston Millennia Partners II, said Dana Callow, managing general partner. The $300 million-targeted vehicle held a first close on $200 million in February, he added. Fund raising on the vehicle began in October.
The fund easily exceeded its goal and could have gone even higher, Callow noted. “The demand was there for us to do a $700 million or an $800 million fund,” he said, adding, “but our process is time intensive and you look at the number of deals per partner that seems reasonable, and this was the number we came up with.” Boston Millennia Partners also raised a $15 million side fund, whose investors are 25 chief executive officers and executives at technology companies, who can help the firm with deal sourcing, evaluation and recruitment.
The fund will focus on early-stage companies in the telecommunications, information technology, software and life science industries. The vehicle will back between 30 and 35 companies with a typical deal size ranging from $5 million to $10 million. Follow-on investing up to a company’s initial public offering could push the total invested in one company up anywhere from $15 million to $20 million. Callow said Boston Millennia Partners likes to invest in companies with a service component and engages in vertical M&A activity in fields in which its portfolio companies are involved.
The fund will invest 80% of its capital throughout the U.S., with an emphasis on the East Coast. The remaining 20% of the vehicle’s capital will be invested abroad in opportunities that are consistent with the firm’s current portfolio and can offer its portfolio companies some measure of support. Callow said he expects the majority of the fund’s international activity to take place in Europe.
Callow declined to identify the fund’s limited partners. He said the LPs are 97% institutional investors and the remainder is foundations and high-net-worth individuals. Nearly 40% of the vehicle’s LPs hail from 23 European and Latin American countries. “We believe that if entrepreneurs are going to have successful international relationships, they need to have investors from those countries who can introduce them and add value to them abroad,” Callow added.
He said Boston Millennia Partners put up 2% to 3% of the new fund’s capital. He also characterized the vehicle’s management fee and carried interest structure as being at the industry standard. “We basically decided we had people who helped us, so we decided not to push the envelope and kept a fairly traditional carry,” he added.
Boston Millennia Partners also ramped up its investment team for its newest fund. The firm’s $180 million Boston Millennia Partners I, which closed in 1997, was managed by a team of seven professionals. A team of 14 professionals, six general partners, four principals and four associates, will invest the latest vehicle.