HUNTSVILLE, Ala./ATLANTA – The Southeastern Technology Fund is slated to wrap its $100 million-targeted Southeastern Technology Fund II in June, said Managing Partner Mark Dunkel. The firm began raising the fund in November 1999, and held a first close on $83 million three months later.
Southeastern targets early-stage communications, information technology and Internet companies. Fund II will back some 14 or 15 companies, about half of which will be based in the Southeastern United States, a region that is growing as an IT hotbed. Average investments will range from $6 million to $7 million, but the firm is willing to put up as little as $1 million and as much as $14 million into a single company, over several rounds of financing, Emerson Fann, a principal at the firm said.
The $20 million Southeastern Technology Fund I, which closed in September 1998, has backed 10 companies and will make one more investment before it is completely committed. Deals from the first fund included application service provider USinternetworking Inc., communications provider TriVergent Communications Inc. and billing system supplier PaylinX Corp. and individual investments ranged between $250,000 to just over $4 million.
Limited partners in Fund II consist of a mix of high-net-worth individuals and institutional investors, such as SouthTrust Bank and Regions Bank, and includes one international investor, who prefers to remain unnamed. Some 97% of the limited partners in the first fund returned for Fund II, Dunkel said. The firm retains a 2.25% management fee and an 80%/20% carried interest structure, after an 8% preferred return.
Southeastern Technology’s investor base includes more than 50 founders and executives of IT and communications companies who help source deals, form strategic relationships and offer operational advice.
Chris Horgen, a senior managing partner, and Dunkel, are based in the Atlanta office, and they work closely with Fann, who is based in Huntsville. The firm plans to hire another associate and either a partner or a principal, both of whom will be based in Atlanta, sometime during the spring. The general partners collectively invested $3 million in the fund.