NEW YORK – Venrock Associates at the end of June held a $650 million first and final close on Venrock Associates III, said Tony Evnin, managing general partner. Fund-raising efforts for the $600 million-targeted vehicle kicked off in March, he added. At the same time, the firm also raised an additional $150 million for its Venrock Associates vehicle, an evergreen fund formed in 1969 for members of the Rockefeller family and some individuals closely associated with the family, Evnin said. The two funds will invest side by side, he noted.
Evnin said Venrock made the decision to raise the new vehicle as a standard, fixed-term fund because it was a structure with which institutional investors are comfortable and familiar. “It is also simpler from a management and accounting point of view,” he added. Venrock’s previous fund with outside limited partners, Venrock Associates II, had also been structured as an evergreen vehicle. That fund went through two fund-raising cycles, Evnin added. Venrock Associates II will no longer make new investments, though it has some capital left for follow-on deals, he said.
The new vehicle will back early-stage companies in information technology, health-care and life sciences industries, Evnin said. “We maintain a breadth of focus in the IT space,” he said, adding “we will stay active in communications, Internet-related opportunities, optical networking, wireless networking and infrastructure plays.” About 75% of the fund’s capital will go toward investments in the IT space, he noted.
Evnin anticipated the fund making anywhere from 40 to 50 investments, with an average deal size of $10 million to $15 million spread over several rounds of financing. The vehicle will do deals nationwide, he added. He declined to say how much was invested in the fund by Venrock’s general partners, beyond saying it was a substantial amount. He would not disclose the vehicle’s carried interest structure nor management fee; however he did say the vehicle is on the high end in terms of the general partner’s share of the vehicle’s carried interest and on the low end in terms of its management fee.
Evnin said all of the LPs who invested in Venrock Associates II returned to invest in Fund III. He declined to identify any of the new vehicle’s LPs, whose ranks he said were primarily made up of foundations, endowments and some corporations. Despite overwhelming support from its LPs, Venrock decided to cap the fund at $650 million because it did not want to get pushed out of its sweet spot by a large fund, he added. “We want to be able to do early-stage deals and the concern was, if the fund gets too big, we would have to make bigger investments in later rounds and get away from our focus,” Evnin said.
Prior to closing its latest vehicle, Venrock promoted Joseph Casey and Eric Copeland, both formerly principals, to general partner. The firm also hired Michael Brooks, a former senior partner at Whitney & Co., and Thomas Frederick, a former global managing partner at Arthur Andersen, as general partners. Evnin said the moves were prompted by the firm’s growing capital under management, as well as the late-June retirement of Ted McCourtney, a former managing general partner.