CLEVELAND – Morgenthaler in January finalized its private placement memorandum for Morgenthaler Partners VI and began marketing the $450 million-targeted vehicle.
Chief Financial Officer Theodore Laufik, however, said that given initial response from limited partners, the firm likely will close above $550 million.
Investments from MP VI will be split into three areas – 50% in early-stage deals, 40% in late-stage and buyout transactions and 10% in health-care deals. The firm closed its fifth fund in 1998 on $300 million, and the decision to raise a larger fund was directly related to the speed with which the firm invested that capital.
Fund VI’s early-stage investments are expected to focus on communications, Internet infrastructure and e-commerce companies over a three-year period, Laufik said. Meanwhile, buyout and later-stage transactions will target companies that have between $100 million and $500 million in revenue and operate in the industrial technology and service sectors.
Morgenthaler hired Spencer Timm as a venture partner in 1998 to focus on fund raising, and he will manage this latest effort. While the majority of the new capital is expected to come from the firm’s existing limited partners, Laufik said the firm would add a few new LPs for MP VI, although new investors will face a $10 million minimum investment. There will not be any major changes to the firm’s fee structure.
Limited partners in previous Morgenthaler vehicles include AT&T Investment Management, University of Texas, Denver Public School Employees Pension & Benefit Association, Ohio Public Employees’ Retirement System, UMWHA Health & Retirement Funds, The Common Fund, University of Chicago, Massachusetts Institute of Technology, University of Michigan and Stanford Management Co.
In addition, the firm is actively seeking to hire a new partner who will focus on communications investments. Laufik said the firm might also add associate level investment professionals.