Voyager lands safely after difficult journey

Voyager Capital has closed on $107 million for its third early stage venture fund after a year-and-a-half trek during which one its co-founding partners departed and the fund-raising efforts were scaled back.

The Seattle-based firm, which had raised more than $200 million for its second early stage fund in 2000, saw its marketing efforts for fund III take a hit in July 2006 when co-founder Tony Audino resigned. Shortly before his departure, Voyager had closed on $88 million for the fund.

Audino, who prior to launching Voyager worked for several years at Microsoft and created the Microsoft Alumni Network, became managing director of Conenza, which helps companies build and manage online communities. Seattle-based Conenza has office space in the same building and the same floor as Voyager.

The remaining Voyager team—Erik Benson, Curtis Feeny, Enrique Godreau and Bill McAleer—all but halted fund-raising efforts to focus on investing. The firm then cut its fund target. McAleer won’t say what the initial target for the third fund was, but he did say that the goal was revised to reflect that it would be invested by four partners instead of five.

“We lost four or five months of the fund-raising process due to that change,” says McAleer, managing director and co-founder. “We didn’t miss any investments. We didn’t lose any investors.”

To help the firm keep up with daily operations and fill the skills gap created by Audino’s vacancy, Voyager hired two strategic partners: Tom Huseby, formerly a managing partner at SeaPoint Ventures, and Keith Krach, a co-founder of Ariba. Voyager also contracted with San Bruno, Calif.-based Chasm Group, a startup strategy consulting firm, to help it advise its portfolio companies.

Looking for a hit

One local venture capitalist, who has seen the firm’s returns over its last two funds, described its performance as lackluster. The source says that Voyager returned 1.2x the money it raised for its inaugural 1997 fund of $48.2 million and that its $215 million second fund (vintage 2000) did slightly better than most in the industry, but only returned 80% of the capital it had originally raised. “They haven’t proven they can make money in this business,” the source says.

We lost four or five months of the fund-raising process due to [the departure of co-founder Tony Audino]. We didn’t miss any investments. We didn’t lose any investors.

Bill McAleer

McAleer declined to comment on specific returns, but says that the firm is performing better than those numbers would indicate. He also says that the numbers are dated.

“The second fund still has 10 companies still active. We’ll do better than that multiple before it’s through,” McAleer says. “The aggregate revenue for those companies for this year is going to be over $325 million. We have to see exits on those, obviously, but they are solid companies.”

He says a handful of those companies should be IPO candidates soon. The firm has not had an IPO since the dot-com boom, according to Thomson Financial (publisher of VCJ).

It has had several sales. It sold supply-chain software maker SeeCommerce to Teradata Corp. for an undisclosed amount in February 2006. Palo Alto, Calif.-based SeeCommerce had raised $83.5 million from such VCs as Voyager, Focus Ventures and Insight Venture Partners.

Voyager also sold Austin, Texas-based Internet payment processing company ClearCommerce Corp. to eFunds Corp. (NYSE: EFD) for $19.4 million in January 2005. The sale price was less than one-third the $62 million it raised from Voyager and other VCs, including Austin Ventures and New Enterprise Associates.

Another exit for Voyager came from Burlingame, Calif.-based software maker Kadiri, which Workstream (Nasdaq:WSTM) bought for $15.2 million in May 2004. Kadiri had raised about $25 million from Voyager, Onset Ventures and Wheatley Partners, among other VCs.

Limited partners in fund III include the Meyer Memorial Trust, Procific, the Vanderbilt University and the Oregon Investment Fund. —Alexander Haislip