Down By The Bay, Firm Readies Close

Bay Partners of Cupertino, Calif., is putting the finishing touches on its newest fund.

Managing Director Dino Vendetti says that the firm held a “soft” close of $290 million for its 11th fund several weeks ago, led by Horsley Bridge Partners and Paul Capital.

The firm will likely hold a final close on the fund in “the coming weeks,” Vendetti says.

The anticipated close comes roughly half a year after Bay parted ways with General Partner Loring Knoblauch. At the time, Vendetti told PE Week that Knoblauch was no longer with the firm because he moved to the East Coast and Bay was not prepared to open an East Coast office.

Following Knoblauch’s departure, Bay has operated with six general partners – Vendetti, Neal Dempsey, John Freidenrich, Chris Noble, Bob Williams, and its most recent hire, semiconductor specialist Atul Kapadia. Kapadia became a GP last year after a stint as an entrepreneur-in-residence at the firm.

But the number of GPs is likely to drop to five, at least for the short term. The firm said last year that Freidenrich, who founded Bay in 1976, would become chairman emeritus when the firm announced its next fund. His name does not appear on any regulatory filings for Fund XI. And Dempsey, who acts as the firm’s managing partner, notes that Freidenrich started to become less active with the firm beginning in 2001. Dempsey adds that the firm is working on transitioning Bay’s leadership to Williams at the end of this newest fund.

Dempsey also says that the firm is in “advanced negotiations” with “a couple of senior general partners,” and that the firm has recently named a new venture partner and a new principal. Their names have not yet been released.

For Fund XI, no LPs other than Horsley Bridge and Paul Capital are listed in any of Bay’s recent regulatory filings. Bay closed its 10th fund at $364 million in early 2001.

LPs in that fund included A.G. Edwards Capital, Cdb Web Tech SpA, Danske Private Equity, Fort Washington Capital Partners Group, Portfolio Advisors and Grove Street Advisors Inc. Another investor from the previous fund, NEC Corp., is likely not a part of Bay’s newest fund, since, according to Vendetti, no corporate investors are participating in the new fund.

As is the case with many vintage 2000 and 2001 funds, the fund that Bay recently finished investing, a $364 million vehicle, which closed in early 2001, has not seen an exit from the more than two dozen companies it backed.

Two portfolio companies have closed. High-speed wireless data access and services startup Transat Technologies Inc. of Dallas quietly shuttered its doors last year after raising $15.4 million from Bay, Intel Corp., Acorn Campus and Genesis Campus.

In July, Santa Clara, Calif.-based ElectriPhy Corp., which developed semiconductor chips for high-bit-rate broadband, raised a $9 million Series A in January 2004 from Bay and individual investors. The company closed after failing to attract enough investment for a Series B.

Knoblauch sat on the board of both defunct companies.