NEW YORK – Following a promise to potential limited partners that it would diversify its portfolio in terms of both geography and investment stage, Lazard Technology Partners (LTP) recently held a final close on its second venture capital vehicle. The oversubscribed LTP II finished up at $300 million, or $50 million above its initial target capitalization.
The primary departure for LTP II from its $100 million predecessor is that it will expand its investment reach beyond the East Coast and into Europe. The overseas effort will be based out of a new London office whose three-person investment team will be announced next month.
“We’ve targeted 20% of [LTP II] for European investments, but the first close was held in May and it’s already been one-third committed,” said Russell Planitzer, managing principal with LTP. “So if we get four or five European deals out of it that would be good.”
As for the actual identities of the new team – which is expected to include a principal, a vice president and an associate Planitzer would only say that it would consist of native Europeans who are currently not employed by LTP. He added that his New York-based firm has been bombarded with European deal flow by parent company Lazard Freres & Co. and that he is excited by the prospect of having a team on the ground in London.
The other change in LTP II is that it has altered its investment strategy to include a smattering of deals that do not fall within the first fund’s strict seed and early-stage focus. Some examples of this shift include LTP’s presence in recent deals for bulk e-mail manager Flight Network Recorder Inc., Internet infrastructure provider Managed Objects and instant messenger software developer Odigo.
“While we are still principally an early-stage fund, the investing environment right now makes late-stage deals very attractive so we’re looking at some,” Planitzer said.
On average, the company will invest between $1 million to $5 million into companies offering series A venture deals. In terms of industry focus, LTP will continue to evenly split its portfolio between companies that specialize in software, Internet infrastructure and communications.
A number of individual investors had ample opportunity to get in on LTP II. In all, $80 million was contributed by Lazard partners and employees, up from the $20 million they committed on LTP I.
Existing LPs also upped their stakes, from $80 million to just over $100 million. The remaining $120 million was committed by a variety of institutional investors, including at least one large tech-focused European pension fund.