ANDOVER, Mass. – CMGI Inc., through its @Ventures venture arm, has completed initial closes on two separate investment vehicles that will target companies in the business-to-business and business-to-consumer e-commerce industries.
CMGI is the sole limited partner for both funds, CMGI @Ventures B2B Fund and @Ventures IV. Together they are expected to raise as much as $2 billion, said @Ventures General Partner Brad Garlinghouse, who would not disclose how much CMGI already has committed to each fund. He did say that the firm has more than $6 billion in cash and marketable securities and has allocated a substantial amount to each venture fund.
“Our biggest wins have all been pure B-to-B companies, but we have not been perceived as such a big player in the space,” he said. “This is us saying out loud that B-to-B will be an important part of our strategy.”
With the CMGI @Ventures B2B Fund focused on B-to-B, Garlinghouse said @Ventures IV will be more consumer-oriented than the firm’s previous funds. The $280 million @Ventures III allocated approximately $3 million to $5 million to each e-commerce company, while Fund IV will commit as much as $15 million to a portfolio company’s first institutional round of financing. The larger size of each fund will also enable @Ventures to commit capital to later-stage investment opportunities.
“Historically, we have not been active in later-stage,” Garlinghouse said. “Now we can start doing deals with larger valuations and devote larger chunks of money.”
Benchmark Capital and Oak Investment Partners have each raised $1 billion venture funds in recent months, fueling a debate within the industry over whether large funds can capably manage early-stage investment opportunities.
“We are best at identifying early-stage investment opportunities and will still consider seed-stage investments,” Garlinghouse said. “We are lucky to have positive relationships with a number of angel groups and venture catalysts.”
He added that the firm might hire an additional investment professional to assist in the management of both funds.
While @Ventures III raised money from outside investors, including Microsoft Corp. and Vulcan Ventures, CMGI decided to be Fund IV’s exclusive investor, as it was for the firm’s first two funds. Both Fund IV and the B2B Fund will function as limited partnerships, with standard carried interest splits and management fees. CMGI put up 19.9% of Fund III.