MENLO PARK, Calif. – Redpoint Ventures and Palladium Venture Capital, the two venture firms that emerged last summer following a restructuring of Brentwood Venture Capital and Institutional Venture Partners, completed fund raising for their inaugural funds.
Redpoint, the information-technology group that initially operated under the code-name T-Rex, in mid-October closed on $600 million for its main fund, Redpoint Ventures I L.P. At press time, the firm expected an imminent close on another $100 million to $125 million for an affiliate fund raised from individuals, said Partner John Walecka.
Meanwhile, Palladium, the health-care team that initially had been known as Project Pinnacle, was slated to hold a $250 million close on Palladium Venture Capital I in mid-November, said Managing Director Beckie Robertson, noting that the fund was oversubscribed.
Palladium and Redpoint were formed so each group could focus on either health care or information technology, rather than continue with the dual-sector strategy approach used by Brentwood and IVP (VCJ, October, page 5). The reconfiguration of the two veteran firms was a dramatic example of the VC world’s increasing move toward specialization.
“I think the biggest surprise (in fund raising) was … both Palladium and health care got a terrific reception,” Robertson said. “We found the limited partners both very interested and excited about having some of their portfolio in health care.”
The health-care-focused Palladium comprises seven managing directors: Brentwood’s Ross Jaffe, Brian Atwood and Bill Link; IVP’s Sam Colella and Robertson; and CrossPoint Venture Partners’ Don Milder and Barbara Lubash, who work for Palladium in Southern California with Link. The group expects to expand its staff in both Northern and Southern California, with perhaps an analyst or a venture partner and some entrepreneurs-in-residence, Robertson said.
Meanwhile, IT-focused Redpoint has six partners, one special partner, one principal and two advisory partners. Three of the partners – Jeff Brody, Brad Jones and Walecka – came from Brentwood, and the other three – Geoff Yang, Tom Dyal and Tim Haley – came from IVP. IVP’s Colella is the special partner and IVP’s Allen Beasley is the principal. Brentwood Founder Kip Hagopian and IVP Founder Reid Dennis are Redpoint’s advisory partners.
Walecka said the IT team went on the road to introduce themselves to prospective limited partners, and while there were no first-time fund concerns, potential investors did raise questions about potential cultural issues that might arise from merging VCs from two venture firms into a new enterprise. But Walecka pointed out that the firm’s members have known each other professionally and personally for years.
Redpoint’s backers include the endowments of Harvard, Princeton, Stanford and Yale universities, the University of Chicago, Brinson Partners, Horsely Bridge Partners and St. Paul Venture Capital, Walecka said.
He expects Redpoint to invest some $20 million to $50 million each with Redpoint I.
Meanwhile, IVP and Brentwood’s existing funds will continue to be managed by the investment professionals of both firms, including those now with Palladium and Redpoint.
Brentwood Associates IX wrapped in fall 1998 on $300 million, and IVP VIII snagged $350 million in spring 1998.