VCs Look Offshore and Other Offbeat Places for Profits –

Venture capitalists can take heart that two venture-backed companies went public during February, raising $298 million. That’s up from a single venture-backed IPO in February of 2002 that raised $70 million.

But if you look a little closer at the two deals you’ll find that they aren’t traditional venture deals. One, Endurance Specialty Holdings, is an offshore company that writes “specialty” insurance and reinsurance policies. The other, Accredited Home Lenders, specializes in making loans to homeowners who have troubled credit. (See detailed profiles of each company on the two previous pages.)

Not exactly your bread-and-butter technology startups that VCs are so well known for. But with the technology market in the toilet, VCs are looking in some odd places to shore up their IRRs.

Neither of the IPOs was a moon shot-doubling in price on its first day of trading. In fact, Accredited was down 75 cents from its opening price on the first day of trading. But it would be hard for Crosspoint Venture Partners or Enterprise Partners to complain: Both were able to sell some healthy chunks of stock in the offering: Crosspoint sold 850,000 shares for $6.8 million and Enterprise Partners sold 700,000 shares for $5.6 million. They still own 1.65 million and 1.3 million shares, respectively. With the stock trading at $8 on March 10, Crosspoint’s holdings were worth $13.2 million and Enterprise Partners’ were worth $10.4 million. That’s gotta make their LPs happy.

The three private equity firms in the Endurance deal didn’t sell a single share in the IPO, and they’re sitting pretty today, with the stock trading at just a nickel less than its offering price as of March 10. That means the 10.5 million shares held by both Thomas H. Lee Equity Partners and TPG Ventures were worth $242 million for each. And Capital Z Investment Partners’ 6.3 million shares were holding steady with a value of $144.5 million. Those kinds of dollar amounts hark back to the dot-com days, but in this case we’re talking about venture-backed companies with growing revenue and healthy profits.