GrandBanks raises $85M

After a long, hard slog, GrandBanks Capital has held a first close of $85 million for its second venture fund.

The 9-year-old firm, based in Newton Center, Mass., set out to raise $200 million starting in March 2007, according to a regulatory filing. It quietly held a first close late last year, says a source familiar with the situation. The names of its limited partners were unavailable.
The firm declined to comment.

GrandBanks is led by Managing Partner Charles “Charley” Lax, who previously co-founded Softbank Venture Capital. Lax declined to discuss fund-raising, citing regulatory restrictions, but he he did say GrandBanks is expecting multiple liquidity events this year and is in advanced negotiations to make its first investments out of the new fund.

In addition to Lax, the firm’s partnership is comprised of General Partners Ryan Moore and Tim Wright.

GrandBanks raised $125 million for its debut fund in 2000. That vehicle has invested about $77 million in 14 companies to date, according to Thomson Reuters (publisher of VCJ).

An early stage investor, GrandBanks primarily focuses on software and services, in which it has backed seven companies. The firm has also invested in three Internet-related companies, three companies in the communications and media space, and one in computer hardware, according to Thomson Reuters.

Liquidity Events

GrandBanks doesn’t have a home run to its name, but it can point to a couple of exits. Two of its portfolio companies have been acquired—Colubris Networks and Enpocket—and a third, GlassHouse Technologies, is in registration for an IPO

Colubris, a wireless LAN provider for enterprises, was purchased in August 2008 by Hewlett-Packard for an undisclosed amount. It had previously raised about $52 million from GrandBanks, DCM, Prism VentureWorks and others.

Enpocket, which develops mobile programs for advertisers, was purchased by Nokia for an undisclosed amount in September 2007. Enpocket had previously raised a little more than $20 million from GrandBanks, BlueRun Ventures (formerly known as Nokia Venture Partners), Dolphin Equity Partners and Thule Investments.

GlassHouse, a provider of data protection and management services to Fortune 100 companies, registered to go public in December 2007, hoping to raise $100 million. For whatever reason, the company wasn’t able to make it out before the IPO window closed last fall. Its prospects don’t look good for this year, with the IPO market in a deep freeze. GlassHouse has raised a total of $75 million from close to a dozen venture firms, including GrandBanks.

Separately, GrandBanks also had one of its portfolio companies merge with another VC-backed company. Concentric Visions, a developer of rich media content management software for the enterprise, merged in 2002 with Outstart, which makes a software platform to deliver learning content. Concentric had previously raised just under $10 million from GrandBanks, Internet Business Capital and Sigma Partners.

GrandBanks has since made a follow-on investment in Outstart, which has raised just over $36 million to date. —Dan Primack and Lawrence AragonDEALWATCH: Five recent investments by GrandBanks Capital

Colubris Networks Inc._Wireless LANs for enterprises and service providers

First Coverage Inc._Optimization software for the institutional community

Incipient Inc._Management software for storage

Vela Systems Inc._Mobile software that streamlines field administration

xkoto Inc._Database load balancing software

Note: Investments made between February 2008 and February 2009. Sources: Thomson Reuters