NEW YORK – Capital Z Partners in March said it would invest $25 million from its latest fund in the online investment bank Wit Capital.
Capital Z will become the largest shareholder in Wit following the close of the growth capital round, expected in late March. Funding came from the recently wrapped $1.85 billion Capital Z Financial Services Fund II. Other investors in the online bank’s latest financing round include Highland Capital and existing investor Draper Fisher Jurvetson, which committed its pro rata share, said Ronald Readmond, president and chief operating officer at Wit.
Wit intends to use proceeds from this Series D financing to further the market readiness of its planned after-hours electronic trading system. Mr. Readmond said the system is now beyond the development stage and is nearing a launch. A portion of the proceeds from this round will assist in establishing strategic partnerships that Mr. Readmond said are essential to the success of the system.
“Capital Z has portfolio companies that we would like to have a banking relationship with,” Mr. Readmond said.
These companies include firms that could provide liquidity to users of the electronic trading system, said Adam Mizel, a partner at Capital Z. In addition to providing introductions to these potential partners, the firm intends to support Wit’s participation in the ongoing “landgrab” for space on the Internet, he added.
“They are pushing forward on many fronts, and we will support management in all these areas,” Mr. Mizel said. He and fellow Capital Z Partner Steven Gluckstern will represent their firm on Wit’s board of directors.
Wit has included private equity in that push, and, to further the firm’s presence in the private market, Mr. Readmond said Wit will launch a $25 million private equity fund within the next month.
“This is an opportunity to involve relevant, accredited individual investors in the private equity cycle,” he said. Further details about the fund were not disclosed.
Representatives at Wit would not comment on the possibility of an initial public offering following the close of this financing.