Well known among venture capitalists for its Global Venture Network conferences, Alpine Venture Associates is currently in the midst of raising a $200 million-targeted fund-of-funds.
The small private equity firm, named for its Alpine, N.J., home, expects to close the fund next June, but will officially start investing in November, following its Global Venture Network conference, entitled “Venture Capital & Private Equity 2001: The Year in Review and Outlook for 2002.”
Although Alpine entered the venture capital business before joining the conference circuit, the firm has managed to gain some momentum in the conference arena. Its next conference, scheduled for Oct. 18-19 in New York, is already sold out.
“We use the conferences as a way to meet people. It helps us do our part of the due diligence, which is getting to know the partners. We started the conferences with nothing, just an idea, and it really helps us,” said James Hahn, co-founder and chairman of Alpine and the Global Venture Network.
Named Global Venture Asset Management (GVAM), the fund-of-funds has an initial fund-raising goal of $100 million from offshore investors. Additionally, it plans to raise the remaining $100 million from U.S.-based backers. The fund has already raised $30 million and garnered another $20 million in soft commitments to date.
“We have stronger contacts abroad and most U.S. institutions believe there has to be a quantitative track record before investing,” Hahn said.
Diversify, Diversify, Diversify
GVAM’s primary objective is diversification. “If you are an investor, you have to question the degree of diversity of the funds you invest in,” Hahn said. “If a fund is investing in infrastructure software in Virginia and California, you are getting similar investments, which can be problematic.”
GVAM plans to pump at least $20 million of the $200 million investment vehicle into 10 venture funds that back biotechnology, biopharmaceutical, emerging technology or distressed securities plays. Hahn said the firm hasn’t yet determined how much it plans to invest in each sector.
The distressed securities sector is uncharted territory for Alpine. Still, the firm chose to dedicate part of the fund-of-fund’s resources to that sector because although such investments traditionally generate low returns, they also are typically constant, which can be a blessing in a down-trodden economy, Hahn said.
In 1998, Alpine raised a $30 million traditional venture capital fund. GVAM is the firm’s first fund-of-funds, however. “Our expertise is not being on the front lines. We are good at fundraising and allocating,” Hahn said.
Danielle Fugazy can be contacted at: Danielle.Fugazy@tfn.com