NASHVILLE, Tenn.- Salix Ventures promoted Marty Felsenthal in mid-June to general partner. The move came at the same time as the firm closed its second fund, the $115 million Salix Ventures II LP fund, and in advance of the launch of fund-raising efforts for a $10 million-targeted affiliate fund.
“Marty did a phenomenal job as a principal in the first fund and as the funds you have under management grow, you need to make sure you have a strong general partnership group. We always expected him to grow into this role,” said David Ward, general partner.
Ward said Felsenthal’s day-to-day workload should not change as a result of his promotion, because Salix’s investment team works collectively and makes decisions as a group. “However, Marty’s overall responsibilities and authority are larger now,” Ward added.
Salix primarily backs early-stage health-care services and health-care information technology companies, Felsenthal said. The new fund will back around 15 to 20 companies with a typical deal size of $5 million to $7 million, he added. Typically the firm invests half of that amount initially, saving the remainder for follow-on investments, he added. Up to 25% of Salix’s investments will go towards backing late-stage companies, he noted. “It is nice to have some passive late-stage investments where you do not have to do much, because this balances out your time and your portfolio,” Ward said. “Of course, you can only do this when you are sure about the company.”
Salix will invest the fund nationwide, Felsenthal said. The firm’s previous fund, the $60 million Salix Ventures I LP, closed in 1997, and is now fully committed to 14 companies spread across the country, he noted.
Limited partners in Salix’s new fund include Bell Atlantic Asset Management, Pantheon Ventures Ltd., Commonfund Capital, The University of Notre Dame and INVESCO. Salix plans to begin fund raising for its affiliate fund this fall, Ward said. LPs in that vehicle will be made up of health-care industry individuals who can add strategic value to Salix’s main fund by helping with such tasks as deal flow and due diligence, he noted. Felsenthal characterized Salix’s carried interest structure and management fees as being at the industry standard. The firm put up 1% of the new fund’s total capital.
Felsenthal joined Salix in July 1997 out of Stanford Business School, as the firm was ramping up fund-raising efforts on its freshman vehicle. Prior to business school, Felsenthal worked in the health-care investment banking group and then the high technology group at Alex. Brown & Sons from 1992 to 1995.
Salix’s investment team currently consists of four investment professionals, Ward, Felsenthal, General Partner Christopher Grant, Jr., and Principal Mark Donovan. The firm also recently added Robert Ivy as chief financial officer. Ward said he did not anticipate the firm making any additional hires.