TL Ventures Targets $750 Million Fund V –

TL VentureWAYNE, Pa. – TL Ventures will likely hold a final close on its $750 million-targeted TL Ventures V fund by the end of January, said Massoud Entekhabi, managing director. The vehicle held a second close on a significant portion of the target amount in the early fall, he added. The fund was launched in late April (VCJ, June 2000, page 18).

The vehicle will back early-stage companies in the biotech, network communications and infrastructure and information technology industries, Entekhabi said. On the communications side, the firm is currently very interested in wireless and optical networking plays, while its focus in the IT world is mainly on enterprise software and e-business deals, he commented.

The vehicle should do approximately 50 to 60 deals with an initial investment of $5 million to $7.5 million, Entekhabi said. “Given today’s market and the longer amount of time it is taking for companies to reach liquidity events, we might hold a little more capital in reserve for follow-on investments,” he added.

TL Venture will likely invest its newest vehicle over a three-year period, he said. “In this climate we are in no hurry to invest our funds,” he said, adding “in the last three months company valuations have normalized and our appetite for quality deals is peaking.”

TL Ventures will invest the fund nationwide, Entekhabi said. However, the majority of the fund’s investments will likely be concentrated around the firm’s offices in Wayne, Pa., Addison, Texas, Austin, Texas and TL Venture’s newest location in Santa Monica, Calif., he noted. The firm opened the Santa Monica office in mid-October and it is currently staffed by Entekhabi, who joined the firm in July 2000, Robert Verratti, managing director, and two principals.

Even though Southern California is the third largest venture capital market in the world after New England and Northern California, TL Ventures believes VCs still under serve the region, Entekhabi explained. Taking this fact together with TL Venture’s growing capital under management and it was a natural decision for the firm to open up a Southern California office, he commented. “Our strategy has always been about being in large, under served markets,” he said.

Entekhabi declined to identify any of the Fund V’s limited partners, beyond describing them as world class in caliber. Investors in previous TL Ventures’ vehicles have included the State of Michigan Retirement System, California Public Employees’ Retirement System (CalPERS), Safeguard Scientifics Inc. and the Pennsylvannia State Employees’ Retirement System (SERS).

Entekhabi declined to discuss the new fund’s management fee, beyond saying they are not outside of the industry norms. He also declined to reveal how much of the vehicle’s capital TL Ventures put up, though he did say it was more than required by the private placement memorandum.