WAYNE, Pa. – Hoping to expand on its reputation for looking outside of the traditional geographic box, TL Ventures recently held a $675 million final close on its sixth private equity vehicle. Approximately 40% of the new fund’s capital has been earmarked for Southwestern investments, while much of the remaining $405 million will be aimed at Northern Virginia, Silicon Alley, Silicon Valley, Boston and Washington D.C.
“I think that our strategy of pursuing under-served markets really resonated with our investor base,” said Robert Fabbio, a general partner with TL Ventures.
Not all investors, however, were completely sold on what TL Ventures had to offer. The Wayne-based firm had initially launched its new offering with a $750 million target capitalization, and Managing Director Massoud Entekhabi reaffirmed that goal during a previous interview (VCJ, January, page 24).
“Early on, we had talked about raising $750 million or even more, but as it became clear that we were entering the market in difficult times, we pulled back our expectations,” Fabbio said.
One possible explanation for the shortfall may be that a number of institutional limited partners have begun to shy away from early-stage private equity players like TL Ventures. At the very least, few investors are eager to up their average stakes by nearly 2.9 times what had been committed for the $260 million fifth fund.
Of course, many LPs did put in 2.5 times as much as they did the last time around. Although the firm has not yet released a list of its returning investors, likely culprits include past backers such as CalPERS, Cornell University, Mellon Bank, the Pennsylvania State Employees Retirement System and Safeguard Scientifics Inc.
In all, approximately 80% of the new fund’s capital came from existing investors, while the remaining 20% included a number of new corporate and strategic players. TL Ventures plans to publicly introduce those investors within the next few weeks.
While the firm plans to continue making investments in information technology and life sciences companies, it also plans to get far more aggressive within the communications sector.
“We’ve stuck to our knitting as an early-stage private equity fund, but that doesn’t mean we can’t compete for some of the big communications deals out there,” Fabbio said.
So far, the firm has made 14 investments out of TL Ventures V (the firm’s first fund was named Radnor Venture Partners). In all, the new vehicle is expected to finance between 50 to 60 deals over three years, with lifetime investments ranging from $5 million to $15 million per portfolio company.