CHARLOTTE, N.C. – Eager to focus on investing its latest fund, Piedmont Venture Capital Management expected a second close on its sophomore vehicle by the end of February.
Stacy Anderson, a managing principal of the fund, would not comment on the size of the expected close, or the vehicle’s first close last fall, but she expected a final close by the third quarter. Piedmont Venture Partners II’s offering memorandum set a $60 million target with a $75 million cap.
The fund, focused on information technology and life sciences, has already closed two deals: a November investment in Lexington, Ky.-based business-to-business Web software developer CommerceInc and a January commitment to Raleigh, N.C.-based sporting event cybercaster Total Sports Inc., which was a follow-on investment from Piedmont I. The firm is itching to put more capital to work – Ms. Anderson noted at press time that Piedmont had several term sheets in the works.
Piedmont decided to expand the focus of its second vehicle from strictly North Carolina to the entire Southeastern United States. “Our marketplace … is so undercapitalized, there’s more deals than dollars,” Ms. Anderson said. Piedmont I invested in a host of Internet companies, a trend Ms. Anderson expects to continue with Fund II.
Using the Past to Chart a Future
Piedmont I, which closed on $25 million in December 1997, invested in 13 portfolio companies over 20 transactions. About three-quarters of the fund was devoted to IT deals.
However, the firm does not want to neglect the health-care market, despite the huge capital commitments many of the sector’s early-stage businesses require. “We do not have the big pockets to play in some of the pricier health-care deals, [but] we want exposure there,” Ms. Anderson said.
Piedmont I was composed of an even mix of institutional and individual investors, but Fund II will be “heavily institutional,” she said. Investors thus far include Bank of America and Travelers Group, as well as pensions for Piedmont Natural Gas, United Dominion, Ruddick Corp. and Duke Energy.
“We’re obviously very pleased with our degree of repeat investors … we’re very pleased with [the] receptivity to a second fund,” Ms. Anderson said.
According to the fund’s offering memorandum, Piedmont’s general partnership – consisting of Ms. Anderson, Pamela Clement and William Neal – will invest 1% of its total commitments, and the vehicle has a standard 2.5% annual management fee.