BOSTON – The Pioneer Group Inc.’s venture arm in mid-March spun out and formed its own firm, Ascent Venture Management Inc., and at the same time Pioneer sold its interests in three of its venture subsidiary’s funds to Landmark Partners Inc.
Ascent will continue to manage the three funds raised under Pioneer’s umbrella – Pioneer Capital Corp., Pioneer Venture Partners and the 1995 Pioneer Ventures L.P. II – and the new group is planning to raise a fourth vehicle targeting $150 million.
Pioneer was the sole investor in the first two funds, and the group was a limited partner holding about 14% of the $64 million Pioneer Ventures L.P. II fund, Ascent Managing Director Walter Dick said. Pioneer Ventures II had raised additional capital from outside investors.
Landmark paid $35 million for its stake in the three funds and pledged another $12.5 million to continue supporting portfolio companies in the first two vehicles, said Jim McConnell, a Landmark partner.
Pioneer’s former venture capital team – now managing directors at Ascent – bought a piece of the general partner share in the Pioneer Ventures L.P. II fund, as well as 1% of the earlier funds, Mr. McConnell said, adding that Landmark was attracted to the team’s willingness to put their own money into the deal.
Landmark, based in Hartford, Conn., also was impressed with Pioneer’s portfolio companies, as well as with its experienced staff members and their long history of working together, Mr. McConnell said.
Ascent Managing Director Leigh Michl said he and his colleagues – Christopher Lynch, Frank Polestra and Mr. Dick – approached a short list of leading secondary firms, and “everything clicked” with Landmark. Pioneer decided to sell its interests to “free up resources for additional investments in [Pioneer’s] core businesses,” Mr. Dick said (VCJ, March, page 5).
Mr. Dick was impressed with Landmark’s willingness to provide “dry powder,” or follow-on money, to the 21 portfolio companies in Pioneer’s first two funds. Landmark was also open to letting the management team remain in place and to invest in the deal themselves. “We made it quite clear that we want to maintain our role as the G.P.,” he said. Mr. Dick would not say how much money the managing directors contributed to the deal but indicated the dollar amount was at least seven figures.
Mr. McConnell credited Mr. Dick with shepherding the deal through the Pioneer/Ascent side of the process. “He really kind of quarterbacked the whole thing,” the Landmark partner said, noting that the deal involved “quite a few moving parts.”
Once the dust is settled, Ascent plans to raise its first fund under a new name, tentatively called Ascent Venture Partners III, Mr. Michl said. The vehicle will be a balanced, diversified fund, Mr. Dick said. A launch date had not been firmly set at press time.