Levensohn Venture Partners (LVP) will not raise a fourth venture fund, firm founder and Managing Partner Pascal Levensohn said last month.
The 14-year-old venture firm set out to raise a fourth fund of $150 million in 2008, but that effort was hobbled by the financial crisis, and two personnel issues. The San Francisco-based firm was actually nearing a first close when General Partner Keith Benjamin died from a brain hemorrhage in July 2008. LVP suffered another blow in early 2009 when Managing Partner Kip Sheeline was diagnosed with a serious illness, which he is now recovering from, according to a source close to the firm.
“It only increased the challenges for the firm, given the overall environment,” the source said.
Levensohn said the biggest factor in not raising a new fund was the ongoing liquidity problem for venture funds in general. “We are living with the consequences of a liquidity bottleneck,” he said.
Levensohn noted that in the 1990s about 80% of IPOs were less than $50 million, but deals of that size just aren’t getting done today. “If you can’t have small company IPOs—robust IPOs that are raising less than $50 million—that’s a huge problem for the venture industry and new business formation in the U.S.,” he said. The lack of a robust IPO market has also “impaired” M&A exits, he added.
In a letter sent to colleagues and the media on April 16, Levensohn wrote: “This decision is based on gathering information from our existing, as well as prospective, investors. All of us believe that our efforts are best concentrated on achieving results from our existing portfolio and maximizing returns for our limited partners.”
In a phone interview, Levensohn said he sent the letter because “it’s the right thing to do. I don’t want people speculating about what is or isn’t going on. I want them to hear it from me.”
We are living with the consequences of a liquidity bottleneck.
LVP raised a debut fund of $35 million in 1996, a second fund totaling $105 million in 2000 and a third fund totaling $67 million in 2004, according to Thomson Reuters. VCJ was unable to find any publicly available performance data for the firm’s latest fund.
Any remaining dry powder from the third fund will go to follow-on investments, not toward new deals, Levensohn said. Fund III has four companies in its portfolio: Akros Silicon, a maker of energy-management semiconductor devices; Capella Photonics, a maker of subsystems for optical networks; ShotSpotter, which makes gunshot technology for the law enforcement and military markets; and Ubicom, a fables chipmaker focused on media devices and wireless routers.
Akros is still early stage, but Capella, ShotSpotter and Ubicom are all “doing in excess of $10M and more in revenues and are on strong trajectories, some approaching $20 million this year,” Levensohn said.
Levensohn said in the letter that, “All four LVP partners currently plan to remain engaged with and serve as directors on the boards of their current companies to position each investment for successful liquidity events over the next several years.”
Besides Levensohn and Sheeline, the firm’s other members are General Partner Jeff Karras, who sits on the boards of Plum and Sim Ops Studios, and General Partner Steve Reale, who serves on the boards of BigFix, Capella and Consolidated IP Holdings.
Sheeline sits on the boards of BroadLogic and Capella, while Levensohn sits on the boards of Akros Silicon, Consolidated IP Holdings, ShotSpotter (where he is chairman), Ubicom and Veraz Networks, according to LVP’s website.—Lawrence Aragon