Donohue sells stake in Expansion Partners

Mark Donohue sold his controlling interest in Expansion Capital Partners and has resigned as managing partner and chairman to pursue an opportunity teaching at his alma-mater Babson College.

In addition, Diana Propper de Callejon and Bernardo Llovera have become co-managing partners.

Expansion Capital, co-founded in 2001 by Donohue, was one of the early pioneers in developing the cleantech venture capital sector.

Donohue will maintain a slice of the fee and carry in Expansion’s Clean Technology Fund II, a $103 million vehcile, which held a first close in 2005, and he will have a small stake in Expansion’s next fund. Donohue, who no longer represents the firm in an official capacity, expects that his former partners will raise between $150 million and $200 million, in 2009, for fund III.

Donohue will also serve in the role of chairman emeritus and help the firm hire a third partner for that fund.

Donohue will maintain his dual residences in Boston and San Francisco, as he works with Babson College as its first “Clean Technology Entrepreneur in Residence.” He will co-lead the expansion of its cleantech and sustainability curriculum.

“Babson is an extraordinary opportunity, with greater learning potential and positive impact on society, as compared to my remaining managing partner at Expansion Capital.” Donohue says. “I wanted the space to be as creative as I wanted to be and to capitalize on the cleantech megatrend in alternative models to those offered within Expansion.”

His new position will call on him to create a series of cleantech course modules and case studies that can be adopted and adapted by universities in an “open-source” model, he says.

“It’s a very big canvas to paint with. We are talking about affecting thousands of students’ lives and thousands of businesses,” he says.

He will also teach at Babson’s Center for Executive Education, which is ranked sixth in the world. To make these initiatives permanent, Donohue will help the school raise $20 million to support its global cleantech initiatives.

Donohue says that the firm’s LPs have taken the transition well, thanks to the strength of the team that he built, the solid portfolio that has been created and Expansion’s successfully defined investment strategy.

LPs include the founding families of ten Fortune 1000 companies, Piper Jaffray’s CleanTech Fund of Funds, the Merck Family Fund, ASN bank’s venture capital fund, Georgieff Capital and Henry Corning, whose family is a founding backer of Greylock Partners.