Thomas Edison was both an ingenious inventor and a shrewd businessman. Like its namesake, Edison Venture Fund operates both as a venture capital firm and a buyout firm, depending on the circumstances. The Lawrenceville, N.J.-based private equity firm is gearing up to bring its hybrid gospel to LPs once more as it looks to raise $200 million for Edison Venture Fund VI.
The firm hopes to hold a first close on the fund in Q3 2005 and a final close in Q1 2006. While $200 million is the fund’s target, Edison is prepared to accept up to $250 million in commitments. Its fee and carry structure will mirror its previous three funds: a 20% carry with a 2% management fee with limited partners guaranteed a return of 125 percent.
For the first time in its history, Edison Venture Fund is looking outside the United States for new limited partners, with a focus on European funds-of-funds that have offices in the U.S. Limited partners in previous Edison Venture funds include MBL Life Assurance Corp., Maryland Venture Capital Trust, MetLife, PSEG Resources Corp. and Zurich Scudder Investments, according to Thomson Venture Economics (publisher of Buyouts).
Edison is a late- and expansion-stage investor focused on IT and business services companies that serve major industries. The fund will fund companies with between $5 million and $20 million in revenue. Edison will take ownership stakes between 20% and 80 percent. Additionally, Edison invests regionally from New York State to Virginia.
Edison closed on Edison Venture Fund V in 2002 with $142 million. Fund V is invested in 21 companies and is the sole or lead investor in all 21 companies. Fund V will likely be fully invested with 25 companies by early Q3. Last week it announced it made a follow-on investment of $1.75 million to New Haven, Conn.-based Tangoe, which provides expense management software and telecom services.
Moreover, the firm is now starting to see exits from its fourth fund, which closed in 1998 with $116 million. In early March the firm announced that Derivatives Portfolio Management (DPM), a Somerset, N.J.-based business services provider, was acquired by Mellon Financial. In January, Edison announced that Parsippany, N.J.-based online customer service provider Incurrent Solutions was acquired by Online Resources (NASDAQ: ORCC) for $15 million in cash and stock. Last September, Thermo Electron (NYSE: TMO) acquired Edison portfolio company InnaPhase, a provider of Laboratory Information management Systems (LIMS), for approximately $65 million in cash.
The firm has 19 investment professionals and expects to promote three new partners with its new fund.