Polaris Fund III Wraps on $800M –

BOSTON – Polaris Venture Partners held a first and final close in mid-January on its $800 million Polaris Venture Partners III. The fund, launched in November 1999, will back some 45 to 50 early-stage companies in the United States and abroad, said Jonathan Flint, a founding partner at the firm.

Polaris balances investments between information technology and health-care companies but also is committed to maintaining diversification within those areas, backing genomics, medical device and pharmaceutical companies, as well as data communications, telecommunications, e-commerce, infrastructure and Internet tools and application companies, Flint said.

Fund III will make initial investments of $250,000 to $25 million in each portfolio company, with a total of $10 million to $40 million over several rounds of financing. Polaris prefers to be a company’s first institutional investor and typically leads or co-leads its deals, he said.

The firm’s previous $180 million Polaris Venture Partners II, which closed in 1998, is completely invested in 28 companies. The $80 million Fund I, which closed in 1996, backed 22 companies.

Limited partners include institutional investors such as university endowments and pension funds, as well as entrepreneurs and high level executives Flint said, declining to reveal the firm’s management fee and carried interest structure.

Highlights of the firm’s portfolio include Akamai Technologies Inc., which held an initial public offering in October 1999, Exchange.com, bought by Amazon.com Inc. in May 1999, and Advanced Inhalation Research Inc., purchased by Alkermes Inc. in February 1999. Additionally, portfolio companies Centra Software Inc. and Aspect Medical Systems Inc. are both registered to go public.

Flint, Steve Arnold and Terry McGuire, founded Polaris in 1996. They work with General Partners Thomas Herring, James Earl Brown, Brian Chee and Michael Hirshland. The investment team also includes Chief Financial Officer and Partner John Gannon, and George Conrades, a venture partner at Polaris and chairman and chief executive officer at Akamai.