Blueprint Ventures Takes One For Team

Blueprint Ventures has decided to reduce the management fee charged on its $150 million inaugural fund, according to a confidential memo sent last Monday to limited partners and obtained by Private Equity Week.

The voluntary move comes just weeks after the San Francisco-based firm laid off three partners and confirmed that its second fund would close with less than $75 million (See PEW 3/25, pg. 1). Fund II was originally planned to raise $225 million.

“We believe this is an opportune time for us to demonstrate our ability to build a healthy business while better aligning our interests with those of our investors,” says the memo. “The new management fee will be reduced dramatically in the out-years in order to reduce [LPs’] overall exposure to management fees and better align our interests.”

In addition to cutting the Fund I fee, the memo reveals that Blueprint also plans to delay charging fees on the recently-closed Fund II for the next several months. It also said that specific details of the Fund I change and the limited partnership agreement amendments would be circulated to investors within the next couple of weeks.

Blueprint co-founder Bart Schachter declined to comment specifically on the memo, except to say via email that neither the method nor amount of the reduction has been finalized. He also said that Blueprint is not currently discussing issues related to Fund II.

What Schachter was interested in stressing, however, was that the move was not prompted by LP pressure. “We have not received any pressure from LPs to tackle management fees, mostly because we don’t have multiple funds or multi-billion [dollar funds] under management,” he explains. “In fact, most institutional LPs have advised us not to reduce management fees too much, because we need money to manage the business.”

Institutional investors in Fund I include: BancBoston Ventures, J.F. Shea & Co. Merrill Lynch, Moore Capital Salomon Smith Barney, Tudor Investments and C.E. Unterberg Towbin, where Blueprint’s other co-founder Thomas Unterberg is chairman.

Contact Dan Primack at: Daniel.Primack@tfn.com