Globespan Flies Solo –

In its first fund-raising effort since its amicable split from its parent company, Globespan Capital Partners has raised its first fund. The oversubscribed vehicle closed with $285 million, and included investments from institutional and strategic investors from the United States, Europe and Japan. Its Globespan’s first since spinning out of JAFCO Ltd. in January 2003.

Globespan launched its fund-raising drive in the middle of 2002 with a $240 million target capitalization. It held a $75.5 million first close in August of that year, but then suspended the process to concentrate on its impending – and amicable – split from former parent JAFCO.

“There seems to be this perception that we’ve been raising this fund consistently for the past year and a half, but the truth is that we withdrew from the market while we were working on the separation agreement,” says Barry Schiffman, a Palo Alto, Calif.-based executive managing director of Globespan. “We effectively came back once that process was over.”

The revived fund-raising effort included an emphasis on expanding the geographic breadth of Globespan’s limited partner roster. All committed capital on the firm’s first two funds came from Japanese investors, such as JAFCO, although things began to change by the time Globespan (then JAFCO Ventures) raised its $425 million third fund in 1999.

That vehicle was independently managed under the JAFCO umbrella, and featured an even mix of investments from the United States, Europe and Japan. The new fund increased the U.S. portion to over half, but still includes Japanese partners like JAFCO, Mitsui, NTT Lease, Nippon Venture Capital Corp. and Toyota Tsusho.

Globespan also welcomed a handful of public pension systems and endowments into Globespan Capital Partners IV, despite its concerns over the possibility of fund information being disseminated in response to Freedom of Information Act requests.

Andy Goldfarb, a Boston-based executive managing director with the firm, says that each public LP agreement was scrutinized and structured so as to minimize any potential disclosures. “The way we approached it is by recognizing that some things will almost certainly come out, but that we want to make sure private company information stays private,” Goldfarb says.

The new fund does not feature any changes to Globespan’s investment strategy, which means that the firm will continue to focus on the domestic software, Internet infrastructure, communications and systems and peripherals markets.

Most Globespan deals are early-stage plays of between $4 million to $6 million, but it also actively invests in expansion-stage and late-stage deals. Recent portfolio company additions include Plaxo Inc., an email contact list management company; Millennial Net Inc., a maker of wireless sensor networking devices; and Sorrent Inc., which makes games for wireless devices.

Globespan has not experienced any significant management changes since its previous fund-raising effort, although Schiffman hinted that a senior-level hire could be imminent.

It also has made a handful of administrative changes, including the addition of Marion Schouten as vice president of investor relations. She previously served in a similar position with Flagship Ventures.

Globespan Capital Partners

Founded: 1984

Locations: Boston and Palo Alto, Calif., and a business development office in Tokyo.

Fund Name: Globespan Capital Partners IV.

Size: $285M

Capital Under Management: $750M

Key Execs: Andy Goldfarb and Barry Schiffman, executive managing directors in Boston and Palo Alto, respectively.

Focus: Information technology, such as software, Internet infrastructure and communications and systems.

Previous Fund: JAFCO America Technology Fund III closed in 2000 with $425 million.

Sample Past Investments: Avanex Corp., which went public; Com21, which filed for Chapter 11 bankruptcy in 2003; DynaChip Corp., which has gone defunct; and Qiva, which was acquired.

LPs: JAFCO Ventures, as well as public pension systems and endowments.

Brief History: JAFCO Ventures has operated under the corporate umbrella of Japan’s JAFCO Group since it was launched in 1994. The firm reorganized itself as Globespan Capital Partners in 2003. But the Globespan team has not said sayonara to its former boss. JAFCO, the largest venture capital firm in Japan, signed on as a limited partner.

Source: Thomson Venture Economics, original research.