$1 Billion Target Energizes Battery

Battery Ventures is planning an April launch for its $1 billion Battery VI LP, which will focus on Internet and communications infrastructure and service companies.

Existing investors have already committed in excess of Battery’s $1 billion target, but there are no plans to raise the cap. The venture firm will, however, reserve $100 million of the vehicle for new limited partners, consisting of between 20 to 30 individual entrepreneurs and five strategic corporate investors.

“We feel that if you can get deal flow from these entrepreneurs and cement better relationships with corporations in the industries we do business in, it makes sense for us to add these new limiteds,” said Rick Frisbie, general partner at Battery.

Battery invests exclusively in start-up and early-stage b-to-b e-commerce enterprises because it likes to be a portfolio company’s first institutional investor.

“This is valuation-related,” Frisbie explained. “We won’t pay a promoted price; if you find and control your own deals you get good prices.”

Battery VI will back as many as 60 companies with individual investments coming in at around $10 million. The fund will invest between $16 million and $20 million over the company’s venture life span.

Three Sectors Predominate

Approximately one-third of the fund’s resources will go toward b-to-b e-commerce, 20% in telecom infrastructure and services companies and the remainder in Internet infrastructure and services firms. The fund’s management fee and carried interest structure should both be in line with industry standards.

The $400 million Battery V closed four international Internet and telecom deals, three of which were in Europe with the other in Israel. Frisbie said he expects to do two to three times as many international deals with this new fund because of increased European technology activity.

Battery V, which invested in 35 companies at an average participation of $13 million, had a return rate of more than 200% at the end of 1999, Frisbie said.

Frisbie declined to identify any of Battery’s new limited partners. Previous LP’s in Battery funds have included Harvard University, MIT, Harbourvest Partners and General Motors Corp. He did say, however, that Battery will probably add an additional six to eight investment professionals over the coming months to help manage the new fund.