Cross Atlantic Floats On With Fund II

What began as a meeting between an Irish entrepreneur and a Philadelphia-based venture capitalist in 1998 has evolved into a full-fledged venture firm that invests U.S. capital across the Atlantic into the U.K.

Four years later, with its first fund now fully invested, six managing directors and four offices across the globe, Radnor, Pa.-based Cross Atlantic Capital Partners is raising capital for a new venture fund. Twice as big as its predecessor, Cross Atlantic Technology Fund II is expected to close with $250 million under management by the end of March 2003.

Although more ambitious in size and scope than Cross Atlantic’s debut fund – this one will mark the firm’s entree in Scotland – the firm’s latest offering will stick to the tried and true strategy of its predecessor. It will invest across three sectors: enterprise software, information technology and enabling technologies like nanotechnology. It plans to lead the second round of institutional financing, committing between $2 million and $5 million to each portfolio company.

The fund recently closed its first-ever deal in Scotland – a first-round financing for VEBNet Plc, an Internet-based portal for employee benefits.

“We’ve just begun to plow those fields,” says Glenn Rieger, the firm’s founder and president, of the investment climate in Edinburgh. “The culture, the attitude and the environment are similar to what we discovered in Dublin.”

In June the fund led a $10 million Series B financing for Dublin-based Mobile Aware Ltd., a developer of multi-channel Web applications.

While the firm’s earlier fund split its investments equally between England, Ireland and U.S. deals, this one will concentrate more heavily on U.S. deals. About half of this fund’s capital is expected to fall in the U.S., while the remainder will be split between England, Ireland and Scotland. The firm has outposts in Dublin, Edinburgh and London.

Pockets of innovation, like Dublin and Edinburgh, are ripe for investment, says Rieger They have a large number of students and engineers eager to jump into high-tech jobs, research universities with active technology transfer programs, and local angel networks.

Like its deal flow, investors in the fund are streaming in from both sides of the Atlantic. The Pennsylvania State Employees’ Retirement System, an investor in the firm’s first fund, has committed $12.9 million to the fund. An unnamed Scottish institutional investor is expected to invest, as are a number of European high-net-worth individuals.

The fund made an initial close in late December 2001. It will hold a second close over the next few months before closing the fund to investors at the end of the first quarter 2003.

Contact Carolina Braunschweig