DFJ network expands to Brazil, growth fund inches forward

Draper Fisher Jurvetson is working to rebuild its affiliate network this year, adding funds in Vietnam and Brazil as it continues to market its growth fund.

The firm announced last week that it was starting to raise money, in conjunction with FIR Capital Partners, for a $40 million early stage Brazilian technology fund. The two firms agreed to also raise a follow-on fund called DFJ FIR Brazil Fund II, which hopes to raise $100 million from offshore investors.

Meanwhile, Menlo Park, Calif.-based DFJ and VinaCapital recently raised $25 million toward an early stage tech fund that promises to invest in startups and equitized state-owned enterprises in Vietnam.

VinaCapital’s website lists the fund size as $50 million, suggesting that it may be only half raised, as of the most recent regulatory filing in late March. The increased global push of the affiliate network is spearheaded by DFJ Managing Director Don Wood, who joined the firm in October 2006 from Vanguard Ventures. “His primary role at DFJ will be to bring new value to our network funds and lead our expansion into new geographic and sector markets,” said Managing Director John Fisher. When Wood was hired, Fisher also outlined plans for funds in India, Korea, Vietnam, Canada, Brazil, Israel, and the southeastern United States. Last week, Wood was out of the country and unreachable for comment.

The hire of Wood and the firm’s subsequent global expansion comes after a year of changes for the firm’s affiliate network. It lost DFJ ePlanet Ventures in January 2006 when firm founder Asad Jamal launched his own fund. In October 2006, Draper Atlantic Ventures and DFJ New England opted out of the network and formed a new independent entity known as New Atlantic Ventures.

DFJ ePlanet, which raised $650 million in 2000, bankrolled several DFJ successes, including Baidu.com (Nasdaq: BIDU) and Skype Technologies (which eBay bought for $2.6 billion in 2005). The primary DFJ fund at the time, DFJ VII, had provisions that prevented the firm from investing directly into other countries—a restriction that has since been repealed.

While DFJ is geared to expand internationally, the firm is also trying to expand into new asset classes with the launch of a late stage venture growth fund. Reception to the growth vehicle has been cool, 2as the firm has raised just over $155 million towards its $250 million target after more than 16 months of fund-raising, according to a recent regulatory filing.

The growth effort is led by DFJ co-founder John Fisher, onetime America Online CEO Barry Schuler and venture capitalist Mark Bailey. It has also hired Associate Daniel Groen from TA Associates.

The partners of the growth fund have invested in three known companies to date. The fund participated in a $51 million financing round for Visto, a mobile email technology startup in Redwood City, Calif. Schuler joined the board. The fund backed commercial laser company Raydiance in a $15 million Series C financing alongside the DFJ core fund. It also backed UUSee, a Chinese operator of a video distribution website, as part of a $23.5 million round that included Highland Capital Partners, Steamboat Ventures and return backers Sequoia Capital and Susquehanna International Group.

The time it has taken to raise the growth fund is in contrast to the speed with which DFJ was able to put together its ninth core fund, a $600 million vehicle that stands as its largest fund since the dot-com boom. DFJ started fund-raising in January and hit its target in three months.

The rapid fund-raising effort of fund nine comes as the firm saw nine of its portfolio companies acquired during 2006, according to Thomson Financial (publisher of PE Week).

This year it has already put one of its companies on the IPO path. Energy regulation company EnerNOC filed for a $100 million IPO in February. DFJ backed the company in each of its three investment rounds, helping it raise $27.5 million. EnerNOC closed its $15 million Series C at the end of December with a $215 million valuation, according to Thomson Financial.