StarVest Fund One Wraps on $150 Million –

NEW YORK – StarVest Partners LP earlier this week announced it had held a third and final close on its $150 million freshman vehicle, said Jeanne Sullivan, co-founder and co-chairman. The final close took place in October, Sullivan said. The vehicle was launched in July 1998 and held an initial close on $60 million in July 1999, she added, noting the fund held its second closed on $106 million in July 2000.

The new fund will back early-stage companies in business services, infrastructure software as well as e-business enablers, she said. “We like to invest in the first and second institutional rounds of finacings,” she added, noting “in today’s world you cannot start to early.”

Sullivan said it was too early to say how the fund’s capital would be allocated between its three areas of investment. “The capital will be spread across the three areas of interest, perhaps evenly,” she said. More than aiming for a specific number of investments in each area, StarVest is looking to invest opportunistically in dynamic management teams running developing companies within the firm’s area of focus, she noted.

The vehicle will back approximately 25 companies with an average deal size of approximately $5 million to $6 million, said John Miller, another co-founder and co-chairman at the firm. The fund will focus on backing companies located in New York or on the East Coast, although on a case-by-case basis StarVest will make some investments outside of this corridor, she added. To date the fund has done nine deals accounting for $40 million, she added. Six of these deals were for companies located on the East Coast while the other three companies are on the West Coast, said Deborah Farrington, another co-founder and co-chairman at the firm.

StarVest’s launched its fund-raising efforts with an initial target of $100 million, but was able to raise an additional $50 million because of the momentum the firm gained during the fund-raising process, Farrington said. “The Pennsylvania Public School Employes’ Retirement System (PSERS) was the first major investor that came into the fund and that added interested in the marketplace,” she added. Other limited partners in the fund include the Caisse de depot et placement du Quebec, American National Insurance Company, Capital Investment Company, VentureBank@PNC, Interpublic Group of Companies, Palmetto Partners, Arnold & S. Bleichroeder Inc., Robert Sillerman, former executive chairman of SFX Entertainment, and John Steffens, vice chairman of Merrill Lynch & Co. Inc.

Sullivan declined to disclose the vehicle’s carried interest structure or management fee, beyond describing them as at industry standard levels. She also declined to reveal how much StarVest itself had invested in the new vehicle.

Alistair Christopher can be contacted at