Emergence Capital Partners expects to launch fund-raising for its second vehicle at the end of this quarter, aiming for $175 million, PE Week has learned. It may cap the fund at a higher level.
The San Mateo, Calif.-based firm, which raised $125 million for its inaugural fund in 2004, has staked its future on business models that deliver technological developments as a service, rather than as products. The Emergence partners have already established credibility in this space. They invested just under $1 million in customer relations management company Salesforce.com (Nasdaq: CRM) in 2003 prior to raising their first fund. A year later, Salesforce launched a $100 million IPO.
Limited partners in Emergences first fund include the California Public Employees Retirement System (CalPERS), Fairview Capital Partners, Morgan Stanley Inc., the University of Michigan and the University of Minnesota. The first Emergence fund has called down $6 million of $15 million committed by CalPERS, according to public documents. The cash out and remaining value of CalPERS stake is estimated at $6.16 million, yielding a 2.8% net IRR.
The success of Salesforce.com was enough to propel Emergence co-founders and General Partners Gordon Ritter and Brian Jacobs onto the Forbes Midas List of most successful VCs in 2007. But the firm has yet to have an exit from its first institutional fund.
The partners are undaunted. Ritter expects that the second fund will be easy to raise, compared to fund I, which took 15 months.