DALLAS- Mayflower Capital LLC in early June launched fund raising for its $50 million-targeted Mayflower Venture Capital Fund III LLC, said Scott Pollock, managing director of Mayflower Venture Capital Funds. The firm held a $15 million first close in late June. Mayflower is aiming for a August 31 second close and a third and final close by the end of October, he added.
The fund will primarily back early-stage Internet content companies, business-to-business e-commerce companies and high-tech businesses. “We don’t do deals in retail, but otherwise we do deals in all different industries,” Pollock noted, adding “generally speaking we are betting on the entrepreneurs we back, more than a fully developed, ready to go product.” However, approximately 25% of the fund’s capital will be used to provide growth capital in second and third round financings for more developed “nuts & bolts” companies, he said.
The firm’s latest vehicle will back approximately 10 to 12 companies, with a typical deal size of $3 million, Pollock said. “Because of our offices in Raleigh, N.C. and Dallas, we see a lot of deal flow from these areas,” he added, noting that the vehicle will invest nationwide.
Pollock declined to say how much Mayflower was investing in the fund. He said Mayflower does not charge an annual management fee, but will charge its limited partners a 10% success fee, if the return on the fund doubles. The vehicle’s carried interest structure is approximately 85%/15%, he added.
Mayflower’s newest vehicle comes on the heals of its second fund, Mayflower Venture Capital Fund II LLC, which closed on $16 million in February. That vehicle is now fully invested in six companies. “The amount of good deals out there is tremendous – you have some really great companies looking for money,” he commented, noting the quality and quantity of Mayflower’s deal flow was what spurred the firm to launch a new fund so quickly after closing Fund II.
To date, Fund III has backed one deal. The fund made a $3 million investment in fileFRENZY.com, a Raleigh, N.C.-based application service provider that offers a Web-based solution for managing, storing and sharing all types of files.
The firm’s portfolio also includes BuildNet Inc., a Research Triangle Park, N.C.-based provider of builder management software to the residential building industry. The Web site is angling to be the e-commerce solution for residential construction.
“Our last fund was a screamer,” Pollock said. Although he also said it was too early to provide a rate of return for the previous fund, he added the $16 million fund on paper could be worth more than $50 million.
Pollock declined to identify the new vehicle’s LPs, saying the majority of LPs were high-net-worth individuals, in addition to corporate investors and some other VC firms.