HOUSTON – Murphree Venture Partners in mid-June launched its fifth fund, Murphree Venture Partners V LP, expected to reach between $150 million and $250 million, said Dennis Murphree, a managing general partner at the firm.
The firm plans to hold about two or three closings on the fund, the first of which is expected in late-July or early August, Murphree said. The fund will back about 20 companies in the opto electronics, telecommunications, life sciences, Internet infrastructure and semiconductor spaces. Deals will average between $5 million and $7.5 million, over several rounds, he said, adding that the firm will only enter deals at the seed- or first-round stage. “The earlier the better,” he said.
Previously, the firm raised and invested Murphree Venture Partners IV LP, capitalized at just under $20 million, Murphree said. Fund IV, which closed in October 1998, is almost completely committed to about 13 companies. Average deal sizes in that fund were near $3.5 million.
The firm decided to raise a larger fund to take advantage of all the pre-emptive rights to which it is entitled, investments it could not make previously due to a lack of sufficient capital.
The firm’s portfolio includes companies such as E-Stamp Corp., which held an initial public offering in October 1999, Activerse, which was acquired by CMGI Inc. in April 1999, and MicroOptical Devices, which was sold to Emcore Corp. in December 1997.
In the past, the firm’s limited partners have consisted of an international sample of high-net-worth individuals and families, however a group of institutions are expected to join, accounting for a majority of the capital in the new fund. Morgan Keegan & Co. is the placement agent for the Fund V and also plans to be a limited partner in the vehicle. The firm retains a 2.5% management fee and a standard 80%/20% carried interest structure.
Founded in 1987, the firm has $85 million under management and eight partners spread among four offices: Murphree, L. Marty Fluke and John Dennis are based in Houston; Geoffrey Tudor, William Rice and Alan Moore are based in Austin, Texas; Thomas Stephenson is based in Albuquerque, New Mexico; and Elliot Boullion is based in Boulder, Colorado.
Murphree Venture Partners prefers to be the lead investor when backing companies based near the locations in which the firm has offices, but will make passive co-investments in deals in other parts of the country, Murphree said.
The firm plans to expand to Atlanta and Dallas, and intends to hire a fourth partner in Austin in time to invest the new fund, Murphree said.