Industry Ventures Closes Sixth Fund At $400M Hard Cap
by Deborah Gage
Industry Ventures has closed its largest fund yet--Industry Ventures Fund VI, which closed at its hard cap of $400 million.
The firm invests both directly and indirectly in companies that are five to 10 years old, with more than $20 million in revenue, growing more than 30% per year and backed by a strong venture syndicate.
Industry Ventures Founder and Managing Director Hans Swildens said that Fund VI was oversubscribed and that his firm made room for an Asian investor and a couple of European investors who could help evaluate investments overseas, especially since more U.S.-based venture firms are making foreign investments.
"It's far away, half a world away, with a different language and culture, and it's good to have a local partner on the ground who's in the same time zone and speaks the same language," he said.
Fund VI also includes more participation from endowments, foundations and family offices, which Swildens said was done to diversify investors.
Secondary investment activity is growing, he said, as companies are taking longer to go public or get acquired. That creates a need for investor liquidity, especially since many firms that raised funds around the time of the tech bubble are now winding down.
In response, Industry Ventures has more than doubled the size of its investment team, even though Fund VI is only one-and-a-half times as large as Fund V, which closed at $265 million in 2009.
In Fund V, direct investments accounted for 67% of the fund and secondary deals accounted for 33%. Swildens said he didn't know whether that percentage would change with the new fund.
"We think we'll get higher quality investments in this fund, with more people and a lower partner-to-capital ratio so there's not as much pressure," he said. "We did that thoughtfully so we can repeat our performance or improve it."
Fund V is 83% called, Swildens said, and is in "portfolio management mode," meaning it's reserved to protect current investments.
Industry Ventures does not name its investments--so far there have been two out of Fund VI and one out of a recent $155 million Special Opportunities Fund--or its limited partners. However, LPs include the New Mexico Educational Retirement Board and the San Bernadino County Employees' Retirement Association, according to VentureWire archives.
Capstone Partners was Industry Ventures' placement agent for Fund VI, and Ropes & Gray LLP and Morrison & Foerster LLP did the legal work.
It sees a good environment for secondary investing as firms wind down and seek to sell stakes.
About Industry Ventures LLC
Industry Ventures is a leading investment firm that focuses on venture capital and technology growth equity. The firm invests in secondary and primary opportunities, including purchasing direct portfolios, founders’ interests, tail-end funds, limited partnership interests and other special situations. Founded in 2000, the firm manages over $1 billion of institutional capital and is headquartered in San Francisco with an office in Washington, D.C. For more information, please visit www.industryventures.com.