ANN ARBOR, Mich. – Enterprise Development Fund (EDF) in December held a $20 million first close on EDF Ventures LP and expected a second close on about $20 million at the end of March, said Hayden Harris, a general partner at the firm.
The vehicle will receive two-to-one leveraging from the Small Business Administration, which should bring its total to $120 million. The additional capital will be used to make follow-on investments in portfolio companies, Harris said.
EDF invests in start-up to early-stage e-commerce, health-care and technology companies mainly in the Great Lakes region. The firm, which usually acts as the lead investor in regional deals, will co-invest in deals throughout the United States. EDF plans to invest some $3 million to $5 million of its latest fund in about 20 to 25 individual companies.
At press time, about $6 million of EDF Ventures was already committed to three companies: FoodUSA.com, an online business-to-business meat and dairy exchange; Innovative IT Solutions Inc., an online insurance transaction processing company; and IntraLase Corp., a developer of surgical lasers for ophthalmic applications.
EDF decided to register its third fund as its first Small Business Investment Company at the encouragement of James Parsons, one of the firm’s advisers, and the firm’s attorney, Michael Staebler. Both were active players in SBIC legislation during the early 1990’s, which made it possible for early-stage funds to become licensed as SBICs, Harris said.
The firm’s previous $26 million Enterprise Development Fund II LP is completely committed to or invested in 17 companies. Prior to raising Fund II, which closed in March 1996, the firm invested its $7 million Enterprise Development Fund LP in 16 companies, Harris said.
The firm’s limited partners consist of corporate pensions, banks, universities and high-net-worth individuals.
The firm was founded in 1987 by the three general partners: Mary Campbell, who focuses on Internet and information technology deals; Thomas Porter, who concentrates on investments in the health-care sector; and Harris, who focuses on science and engineering companies. Since then, the investment staff has grown to six, with the addition of Principal James Adox, Senior Associate Beau Laskey and Kauffman Fellow Michael Partsch.