Flag Raises $350M for New Fund-of-Funds

Flag Capital Management has raised $353 million for its fifth VC-focused fund-of-funds, and also is marketing its second vehicle focused on the broader private equity markets.

The Stamford, Conn.-based firm was founded in 1994 as Fox Venture Partners, to help provide wealthy families with access to the institution-dominated venture market.

In the late 1990s, Flag expanded its reach by launching what would become a series of emerging manager fund-of-funds and generalized private equity fund-of-funds.

In 2000, the firm raised $650 million for Flag Venture Partners IV. Two years later, however, groups like Accel Partners and Charles River Ventures began reducing fund sizes, and Flag was consequently forced to cut its own vehicle down to $585 million. It launched Flag Venture Partners V in 2003 with a $350 million target, and quietly held a $353 million final close last month. So far, the fund-of-funds already has invested in new offerings from Alta Partners, Domain Associates and Venrock Associates.

Also in March, Flag held a $183 million second close on Flag Private Equity II, which had held a $48.7 million first close in 2003. The vehicle is expected to close by year-end, and also is being marketed with a $350 million target capitalization. Its only investment to date is with Swedish buyout shop Altor Equity Partners.