Seeing a window of opportunity, secondary investor Industry Ventures is launching a program aimed at the hundreds of venture firms with funds at the end of their ten-year lifecycle.
The San Francisco-based firm, which buys stakes in both venture funds and venture-backed companies, thinks it is well-positioned as an unprecedented number of venture funds reach the end of the runway in the next few years.
Principal Hans Swildens, the firm's founder, said Industry Ventures has done the types of deals it is proposing multiple times, but now has begun a concerted push to sell its approach to general partners as its looks to expand its portfolio and increase its ownership stake in promising companies. The firm closed its $265 million fifth fund in March 2009 and can call more capital through side funds from its limited-partner base or strategic investors.
The initiative comes as the fund-raising wave driven by the tech bubble at last washes ashore. From 1999 through 2001, a total of 1,203 venture funds closed on $179 billion, according to Dow Jones LP Source. Most of these funds had 10 years to make and then exit investments, although extensions of one or two years are common. The challenge for the venture industry is not only the large numbers of funds from those vintage years, but also the number of companies remaining in many portfolios, the result of over-investment during the bubble and a generally poor exit climate afterwards.
To read the full, original article click on this link: Dow Jones Financial Information Services
Author: Russell Garland
