BLUE BELL, Pa. – A year and a half after closing its first private equity fund, Progress Bank at press time was preparing a $15 million first close on a new small business investment company (SBIC) that will invest in early- to late-stage venture deals.
New Spring Ventures will complement the Ben Franklin/Progress Capital Fund, the bank’s $9 million mezzanine vehicle launched in the spring of 1998 to bridge its senior debt and equity lending business (VCJ, May 1998, page 22). The new vehicle will invest $1 million to $3 million per deal in emerging growth, management buyouts and recapitalizations for software, Internet and e-commerce businesses in Pennsylvania and the surrounding Mid-Atlantic region.
The fund will invest in companies with annual revenue of at least $1 million, and it will not consider investments in businesses that have not yet generated revenue. New Spring likely will invest mostly in second round deals, said Progress Vice President Steven Hobman. The bank had not closed any deals by press time.
Progress Financial Corp., a bank holding company whose primary business is the operation of Pennsylvania-focused Progress Bank, invested $5 million in the new fund’s first close, which also included other institutions and high-net-worth individuals. New Spring also has passed the Small Business Administration’s management assessment process, which will give it the ability to leverage as much as $2 for every $1 it raises, Hobman said.
New Spring intends to raise as much as $35 million in private capital, and with SBIC leverage, the fund could total more than $100 million.
Progress Bank hired Managing Partner Janet Paroo and Principal Joe Hawke to manage the fund at its launch in April.