Walden X Launches, Journalist Joins Firm –

SAN FRANCISCO – One team in the Walden family of funds has launched a vehicle and a second Walden entity was preparing to hit the fund raising trail at press time, with each vehicle targeting $150 million to $200 million.

Walden International Investment Group (WIG) is raising its fourth vehicle, Walden Communications Partners, to back early-stage data communications, telecommunications and Internet deals in the United States. The group, which has about 50 investment professionals worldwide and offices throughout Asia, as well as two in Northern California, previously has raised funds that invest in Asia, said General Partner Andy Kau. Backers have included the endowments of Harvard and Stanford universities, as well as the Massachusetts Institute of Technology, HarbourVest Partners, Pantheon Ventures, the Commonfund, the Ford Foundation, the Howard Hughes Foundation, the Kauffman Foundation and overseas investors, including the governments of Singapore, Taiwan, Hong Kong and Mayalysia.

WIG’s last fund, the $328 million PacVen IV, wrapped last year and is being invested in Asia. The group raised two funds in 1997 for U.S. investing, each totaling $10 million from single limited partners. The vehicles are posting gross returns of more than 100% and net returns in the 70s, Kau said.

WIG’s U.S.-based general partners include: Lip-Bu Tan, Danial Faizullabhoy, Som Das, Rikinder Grover and Brian Chiang.

WIG is part of a family of four venture groups operating under the Walden umbrella, which share deal flow and due diligence. San Francisco-based Walden Capital focuses on high technology and retail companies, and Walden Israel taps opportunities in that country. The fourth group is San Francisco-based Walden VC, which at press time was preparing to hit the fund raising trail with Walden X, said Partner Phil Sanderson. Like its predecessors, Walden X will back seed- and early-stage companies in the e-commerce, advertising and ad services, education and entertainment sectors. Sanderson said the firm would put some $5 million in each portfolio company over the life of its investment.

Walden VC has four partners: Art Berliner, Steve Eskenazi, Rich LeFurgy and Sanderson, and the group in late October added an associate, Alex Gove, a former journalist with Red Herring magazine who covered venture capital.

“I think Alex has a fantastic reputation in the industry. He’s extremely bright and driven, and his skills as a journalist carry over to the venture capital industry,” Sanderson said.

“I think Alex is the type of person who can judge management teams, can evaluate businesses, business models and report on them as he’s done in the journalist field. He can also dig into the positives and negatives of a company and really find out what the company’s all about,” Sanderson added. LeFurgy, who has operating experience in advertising, joined Walden in August after working for eight months as a consultant for the firm.

Sanderson expected Walden X to reach a first close by the end of the year and then a second, possibly final close, in the first quarter of next year. The group planned to raise much of Walden X on its own, but at press time it was close to selecting a placement agent to help attract new limited partners. Fees and the carried interested split had not been determined by press time, but Sanderson noted the last fund’s terms were consistent with industry standards.

Walden VC’s most recent vehicle, Walden Media and Information Fund, closed on $62 million in early 1998. About two-thirds of the vehicle came from strategic partners, including America Online Inc., The Washington Post, Gartner Group, Apollo Group and Times Mirror. For Walden X, the firm hopes to attract additional strategic partners as well as financial investors such as endowments and pension funds. The vehicle is being marketed in the U.S. and abroad.