Sevin Rosen Funds continues to fine-tune its general partnership, in preparation of closing a ninth fund within the next month.
The most recent changes came in late April, when Dallas-based Sevin Rosen named both John Oxaal and David McLean general partners. Oxaal first joined the firm in 1999 as an entrepreneur-in-residence, after having co-founded Volumetrics Medical Imaging Inc. He sits on the boards of Ethertronics Inc., Luminescent Technologies, Luxtera Inc., Orbital Data Corp., Tellicent Inc. and Scintera Networks.
McLean is a 20-year semiconductor and networking industry veteran, who most recently served as president and CEO of Cicada Semiconductor Inc., which was sold in February to Vitesse Semiconductor Corp. He also led the introduction of IBM’s DSP product line into Asia, and worked for such tech companies as Pliant Systems Inc. and Applied WDM.
Oxaal and McLean are joining a general partnership that is significantly altered from when Sevin Rosen raised $850 million for its eighth fund in 2000 (that fund was later reduced by $275 million). Gone are general partners Jennifer Gill Roberts, who left late last year, and Charles Phipps, who will retire in conjunction with the Fund IX close. Other changes in Fund IX are Nick Sturiale, who was hired in 1999 as a senior associate, and who will be general partner in the new vehicle. Also, Ram Veldi was promoted to the position of partner after having joined the firm in 2001 as a senior associate.
General Partner Steve Domenik says that the personnel changes won’t affect the firm’s investment strategy, which still is to focus on seed and Series A rounds for information technology companies.
The new fund is expected to close with $300 million by the end of the quarter. About 90% of the fund’s investors will be existing Sevin Rosen LPs, and the firm will continue to permit investment from public institutions.
– Dan Primack
Sorenson Huddles New Group
Armed with a stable of former Bain Capital investors-plus a Super Bowl winning quarterback-Sorenson Capital closed its inaugural fund with $250 million in late April.
The Salt Lake City-based firm plans to invest in buyouts of small- and mid-sized companies in the Western United States.
“Our focus will be on the Mountain region, which we feel is under-served and has a lot of attractive opportunities,” says Frazier Bullock, one of five managing directors with Sorenson.
Bullock served as an original partner of Bain Capital, and gained wider recognition for his role as president and CEO of the Salt Lake City Organizing Committee for the Olympic Winter Games of 2002. Following the Games, Bullock re-entered the deal-making arena, teaming up with Ron Mika, who also was a former managing director with Bain Capital.
At the same time, Rich Lawson and Steve Young, both managing directors of IRR Partners, were looking for a larger platform from which to make direct buyout investments. Lawson was the former president of Bain portfolio company Found Inc., while Young was a San Francisco 49ers quarterback who later served as chairman of Found. The pair teamed up with Bullock and Mika, and quickly discovered that Jim Sorenson, the former CEO of Sorenson Media, was interested in helping to bankroll such a project.
Sorenson Capital was formally launched in February 2003 with a $75 million investment from the Sorenson family. It also included a fifth managing director in Timothy Layton, who had served as a managing director with Alpine Consolidated LLC, which Bullock founded in 1996.
Adams Street Partners then stepped in with a $71 million commitment, followed by limited partner participation from Wilshire Private Markets Group, Massachusetts Mutual Life Insurance Co. and Grove Street Advisors (on behalf of the California Public Employees’ Retirement System).
No member of the Sorenson family is on the active investment team, although Luke Sorenson is an associate with the firm. Two members of the family do sit on the investment advisory board, alongside Bob Gay, a current managing director at Bain Capital.
Sorenson Capital employs 12 private equity professionals, and maintains offices in Salt Lake City, Phoenix and Palo Alto, Calif. It has not yet made its first investment.
– Dan Primack
Angels Partner with Fund
Southern California’s Tech Coast Angels (TCA) has made a new friend – the $3 million Seraphim Fund.
Closed March 31 with commitments from 51 individual investors and family trusts, the Seraphim Fund will invest alongside TCA in the same deals the group sources and funds.
The two went in together on San Diego-based Cargo Technology Inc.’s $2.1 million series B-1 round this spring. The company raised additional funding from Hamilton Apex Technology Ventures, E*Capital Corp., UPS Strategic Enterprise Fund and the Pasadena Angels.
Seraphim will invest in as many as 20 of the TCA’s deals, providing its limited partners with an index-like portfolio of startup companies.
“It’s estimated that there’s 1 million investors that dabble in funding startups,” says Ben Barak, one of the managers for the Seraphim Fund, from his offices in Irvine, Calif. “If they want to invest on a larger scale and diversify their portfolio, this is the way to do it.”
The fund will only invest, however, if at least 10 TCA members agree to put money into a deal, and together, contribute at least $350,000 to the round and one of them takes a seat on the company’s board of directors. TCA members invested $490,000 in Cargo Technology’s round of funding, while the Seraphim Fund contributed $130,000.
Barak himself sits on the TCA’s executive committee. He is a serial entrepreneur who sold his publishing business to Primedia in 1993 and now manages a hedge fund. Barak will manage the Seraphim alongside Andrea Sloan Pink, another member of TCA’s executive committee and the former general counsel to a DSL provider; and John Kensey, an entrepreneur who also founded Avalon Capital.
About 80% of the fund’s limited partners are also members of the TCA.
With its first deal done, no other one is nearly closed, Barak says. Nevertheless, he expects the fund will be fully invested in Southern California’s startups by the end of its three-year investment cycle.
“We’re working on the next one, and doing the due diligence now to invest with other angel groups,” he says.
– Carolina Braunschweig
Flag Raises $350M for FoF
Flag Capital Management has raised $353 million for its fifth VC-focused fund-of-funds, and also is marketing its second vehicle focused on the broader private equity markets.
The Stamford, Conn.-based firm was founded in 1994 as Fox Venture Partners, to help provide wealthy families with access to the institution-dominated venture market.
In the late 1990s, Flag expanded its reach by launching what would become a series of emerging manager fund-of-funds and generalized private equity fund-of-funds.
In 2000, the firm raised $650 million for Flag Venture Partners IV. Two years later, however, groups like Accel Partners and Charles River Ventures began reducing fund sizes, and Flag was consequently forced to cut its own vehicle down to $585 million. It launched Flag Venture Partners V in 2003 with a $350 million target, and quietly held a $353 million final close in March. So far, the fund-of-funds already has invested in new offerings from Alta Partners, Domain Associates and Venrock Associates.
Also in March, Flag held a $183 million second close on Flag Private Equity II, which had held a $48.7 million first close in 2003. The vehicle is expected to close by year-end, and also is being marketed with a $350 million target capitalization. Its only investment to date is with Swedish buyout shop Altor Equity Partners.
– Dan Primack
Bouchard Plans IT VC Fund
Paul Bouchard, a founding partner of Hamilton Apex Partners, plans to leave the firm to launch a new IT-focused venture capital fund.
Bouchard’s new firm will focus on IT, semiconductors and wireless services and infrastructures and will be called Hamilton Tech Capital Partners.
Bouchard is aiming to raise $150 million and plans to start making investments before the end of the year.
Founded four years ago, Hamilton Apex is a venture firm that invests in IT, telecommunications and life sciences from its $100 million Hamilton Apex Technology Ventures fund.
The San Diego-based firm was established in 2000 to invest in Southern California companies. Among the fund’s investments is San Diego-based Santarus Inc., which launched a $54 million IPO on April 1.
Hamilton’s remaining partners plan to launch a new fund focused exclusively on life sciences investments.
– Alastair Goldfisher
VC GPs Venture Into Buyouts
Venture capitalists Terry Garnett and David Helfrich are back in the private equity market, but this time as buyout professionals.
Garnett, formerly a general partner with Venrock Associates, and Helfrich, formerly a general partner with ComVentures, teamed up last year to launch a tech-oriented buyout firm, and in April closed their inaugural fund with $250 million.
Garnett & Helfrich Capital has been likened to a smaller version of Silver Lake Partners, but that’s only partly true. Similar to Silver Lake, Garnett & Helfrich is based in Silicon Valley and will acquire technology companies. Unlike Silver Lake, however, Garnett & Helfrich is exclusively focused on spinouts of under-performing assets, business lines, product lines and divisions of public companies.
– Dan Primack