Seven years ago, four entrepreneurs took their business knowledge and applied it to launching a venture firm. Today CenterPoint Ventures is set to close its third fund with a total of $300 million within the next few weeks
Thus far, CenterPoint Venture Fund III has collected $270 million from wealthy individuals and roughly six institutions, including Commonfund Capital, Scudder Venture Partnership, Rho Management, Rice University, the University of Illinois and Horsley Bridge Partners.
Managing General Partner Robert Paluck said Fund III is very similar to the Austin, Texas-based company’s previous investment vehicles, with two differentiating marks: size and more experienced limited partners.
CenterPoint Venture Fund I, which was launched in 1996 and is fully committed, closed at $50 million with no commitments from institutional LPs. A year and a half later, the company closed its second fund at $100 million and managed to snag Horsley Bridge Partners.
“As funds grow in size, you have to go to institutions to come up with the money. Institutions are not interested in first-time funds, but when you have a track record you get more opportunities,” said Paluck. “Horsley Bridge introduced us to others and they are the largest investor in this round.”
Who invested and how much each put in may have changed, but CenterPoint’s philosophy hasn’t. “Our approach is the same. We will invest in products that can change the dynamics of their markets,” said Paluck.
Indeed, Fund III will invest in companies seeking early-stage funding in the communications infrastructure, business software technology and the semiconductor sectors. Planning to invest an average of $10 million to $15 million per company over several rounds of financing, CenterPoint’s fund should be fully invested over the next three to four years.
Paluck noted that while CenterPoint has geographical flexibility as illustrated by investments in Israel- and Philadelphia-based issuers, roughly 90% of the company’s investments are made in the Dallas and Austin areas.
So far, the new vehicle has made three investments, two of which are in the telecom compliance space.
Contact Danielle Fugazy at: Danielle.Fugazy@tfn.com