CHARLOTTE, NC. – Piedmont Venture Partners planned a June 1 launch for its $50 million-targeted Piedmont III fund, said Stacy Anderson, a managing principal at the firm. Anderson said she expected a first close for the firm’s latest vehicle over the course of the summer. She declined to provide a specific date for the close.
Piedmont III will back early-stage companies in the information technology and life sciences sectors. Roughly 85% of the fund’s capital will be invested in IT businesses with the remaining 15% going to life sciences companies, she added. Anderson expects the fund to back 10 to 13 companies, with an average deal size between $3 million and $5 million. Piedmont’s latest vehicle marks a step up from its previous deal sizes: the $19 million Piedmont I, which closed in 1997, backed 13 companies with a typical deal size of $1.5 million; and the $26 million Piedmont II, which closed in November 1999, backed 13 deals with an average deal size of $2 million.
Piedmont will continue to focus on companies in the Southeastern U.S., but will reserve approximately 30% of Fund III’s capital to invest in companies located in other parts of the country. “Since we are at Fund III now, we have a long list of co-investors we’ve already worked with. Combine this with an initial public offering window that seems to be far away, and I think we will have the chance to invest outside of our area,” Anderson said.
Piedmont generally prefers to be a lead investor, however Anderson said it will not lead deals for companies in other parts of the country. “That would defeat the purpose of being a regional fund, which can take advantage of having dollars on the ground in a specific part of the country,” Anderson noted.
Due to the frenzied pace that has dominated the venture capital market recently, Piedmont had not reserved capital in its previous funds for follow-on rounds of financing. As a result, the firm will also use the new fund to do follow-on rounds in some of their existing portfolio companies from Funds II and I. “This is not a bailout fund or a follow-on fund, but we are reserving the right to be opportunistic,” Anderson said, noting “in some cases there are going to be deals we know better than some business plan we just received, and it makes sense to invest again.”
Anderson declined to say how much Piedmont’s partners were investing in the new vehicle. She said the firm retained an 80%/20% carried interest structure and a 2.5% management fee. Anderson declined to reveal potential limited partners for the new vehicle, however LPs in the firm’s previous two funds included: Bank of America, Citigroup Inc., First Union Corp., Duke University, Duke Energy, and United Dominion Industries Inc.
Chris Lyford was expected to join Piedmont as its chief financial officer on June 15. In addition, Anderson noted the firm is actively looking to add another partner.