BOSTON – The two venture firms recently spawned from Media/Communications Partners were well into their inaugural fund-raising efforts this winter, with M/C Venture Partners expecting to wrap a $250 million vehicle in December and Great Hill Partners anticipating a first and potentially final $300 million close in January.
The six managing partners of Media/Communications split into two firms last fall to allow each group to focus on deals at different stages and to avoid raising a single mammoth fund (VCJ, October 1998, page 5). The 12-year-old Media/Communications had raised three funds to back media and communications, and the firm’s original partners will continue managing investments in those funds.
M/C Venture Partners IV will back the emerging communication sector and will devote at least 80% of its capital to early-stage domestic deals, predominantly in telecommunications networks and information technology services related to telecom networks, said General Partner James Wade. M/C also will consider international telecom opportunities.
The fund targets $200 million but will likely reach $250 million, including co-investments from its general partners, said Mr. Wade, who declined to specify how much capital the G.P.s would put up. The vehicle’s remaining capital likely will come entirely from existing L.P.s of previous Media/Communications Partners funds, he said.
M/C is overseen by General Partners David Croll and Peter Claudy, Mr. Wade and Principal Matthew Rubins.
The other new firm, Great Hill Partners, is managed by Partners Christopher Gaffney, Stephen Gormley and John G. Hayes. Mark Evans also came over as a principal and Matt Murphy as an associate.
The group is raising $300 million to back durable media – such as radio, television, database companies and outdoor advertising outfits – and information franchises, telecommunications and business services, Mr. Gaffney explained.
Great Hill will make late-stage and consolidation investments, undertaking deals in the $10 million to $25 million range, mostly in the United States.
The firm had $200 million in commitments by mid-November for Great Hill Equity Partners, and the fund is expected to reach a first and possibly final close in January, Mr. Gaffney said. The managing partners have agreed to invest at least $11 million in the fund.
The members of Great Hill all have worked together for a decade and were not perceived by limited partners as a first-time fund, Mr. Gaffney said, although limited partners were interested in the reason behind the break up.
L.P.s were initially surprised by the division of Media/Communications Partners, but came to understand the rationale, Mr. Wade said.
M/C IV backers include: California State Teachers’ Retirement System, the California Public Employees’ Retirement System, Pennsylvania State Employes’ Retirement System, the Hillman family, Abbott Capital Management, the Common Fund, Venture Investment Associates, Donaldson, Lufkin & Jenrette and the endowments of Notre Dame, Cornell and Columbia universities.
Great Hill had received early commitments at press time from Chase Capital Partners, First Union Capital Market, INVESCO, CIBC Oppenheimer and Finova.
The Crossroads Group, Yale University, J.P. Morgan Asset Management and Fleet Equity Partners are investing in both M/C IV and Great Hill.
Both of the new funds feature an 80%/20% carried interest split. Messrs. Wade and Gaffney declined to specify management fees but said they were both fairly standard.
M/C Venture Partners plans to hire another general partner in the first half of 1999, and Great Hill foresees adding four people during the year, including one partner and a mix of associates and principals.