With $30 million from the Small Business Administration Co. (SBIC) and $20 million from individuals and institutions in hand, GKM Ventures formally unveiled its first fund this week. Launched last year before gaining SBIC backing, the vehicle invests in early and mid-stage companies located in the Southwest of the U.S. Additionally, the fund focuses on companies in the semiconductor, infrastructure, communication, software and digital media sectors.
GKM Ventures is affiliated with New York-based Gerard Klauer Mattison, an institutional research and investment banking firm, which provides GKM Ventures with expertise and contact with industry leaders. The idea is that Gerard Klauer Mattison’s operating experience combined with the GKM Ventures network will add value to portfolio companies. Gerard Klauer Mattison is also a minority investor in GKM Ventures.
;Our relationship with Gerard Klauer Mattison is the key ingredient that differentiates us from other VCs,” says John Morris, a partner with the fund. “We really leverage their research and expertise to help our portfolio companies. That’s why Jonathan Bloch, who is the founder, named the firm GKM Ventures, he saw the strategic advantage.
The firm intends to co-invest alongside VC firms that put roughly the same amount as GKM Ventures into portfolio companies. “A million and a half is our sweet spot and we will always be investing with other regional funds that invest about that. We have organized 15 funds in Southern California to share deal flow and resources. We bring deals to the table in hopes of getting co-investors interested. We aren’t interested in investing with some mega-fund,” says Morris.
To date, the firm has invested less than 10% of the fund and is actively pursuing new investments. The portfolio includes investments in helloNetwork, a streaming video company, Silicon Bandwidth, a semiconductor company, and Trendium, an enterprise software company. The investment size ranges from $1.5 million to $2 million. Additionally, the fund made a strategic investment in ITU Ventures, a seed-stage venture fund.
Morris expects the fund to be fully committed in 2004 with 15 to 18 portfolio companies. “We see ourselves with a follow-on fund in 2004 or 2005. Right now we’re trying to build companies in the Southwest community and make sure they’re attractive to corporate players because you can’t count on IPOs,” says Morris.
Contact Danielle Fugazy