PORTLAND, Ore. – Entrepreneur and venture consultant Bill Kallman and venture capitalist Jeffrey Tung are marketing an inaugural fund from their newly formed Timberline Ventures L.L.C., a venture firm focused on the Pacific Northwest.
Timberline Venture Partners L.P. is targeting $60 million and likely will be capped at $75 million, Mr. Tung said. The new firm, with support of “advisory general partner” Tim Draper of Draper Fisher Jurvetson, will back earlier-stage information technology companies. Mr. Tung was planning a March 1 close on about $40 million
Timberline, formed late last year, has been raising money from investors in the United States and overseas. The firm’s efforts were dampened by the Asian financial crisis, which caused a South Korean backer to withdraw a $10 million commitment, Mr. Tung said.
Landmark Partners has stepped in as a lead investor and sponsor, backing the firm through its latest fund-of-funds (VCJ, March, page 26) and introducing the new venture group to other investors. The Oregon State treasury also has committed to Timberline, Mr. Tung said.
Landmark Managing Partner John Griner met Messrs. Kallman and Tung while they were fund raising on the East Coast and said he was “impressed” with their backgrounds.
Prior to forming Timberline, Mr. Tung led Xerox Technology Ventures, a corporate VC effort that was based in Southern California. Documentum was a portfolio company that earned Xerox $180 million at the time of its initial public offering from a $4.4 million investment, Mr.Tung said.
Mr. Kallman, an executive at several high-technology companies who raised venture capital from the operating side, worked with Internet radio broadcaster Infinite Music, ipotics and Eyeonics, a consumer electronics company. He also held a variety of posts at Kollmorgen, Cray Research and Hewlett Packard.
Landmark liked Timberline’s Northwest focus and its ties to Mr. Draper. Mr. Griner said he had his usual concerns about a first-time fund, but said that all major firms, including Kleiner Perkins Caufield &Byers, have had to raise first funds.
Messrs. Draper and Kallman were introduced by Pitch Johnson of Asset Management Co., who was a former business partner of Mr. Draper’s father.
Mr. Draper’s involvement with Timberline is part of his firm’s efforts to broaden its geographic reach through affiliations with other funds. He will be involved with investment committee decisions, but Messrs. Tung and Kallman will run Timberline’s daily operations, Mr. Kallman said.
Timberline occasionally will make investments outside the Northwest, but the firm plans to capitalize on the growth of large high-tech business in the region, including Intel Corp. and Microsoft Corp., whose employees are perspective entrepreneurs that could develop companies in cities such as Portland and Seattle.
Timberline will invest as little as $500,000 to as much as $5 million in a company’s single round of financing, a range that hovers below the radar of the mega-funds. No company, however, will receive more than 15% of the firm’s fund.
Timberline is wary of capital-intensive businesses such as pure hardware or semiconductor equipment, as well as pure research deals that could take years to materialize with a commercial product or service, Mr. Tung said.
Timberline Venture Partners features a 2.5% management fee and an 80%/20% carried interest split. – S.N.