GrandBanks holds first close on $200M fund

After a long, hard slog, GrandBanks Capital has held a first close of $85 million for its second venture fund, PE Week has learned.

The 9-year-old firm, based in Newton Center, Mass., set out to raise $200 million starting in March 2007, according to a regulatory filing. It quietly held a first close late last year, says a source familiar with the situation.

PE Week was unable to reach GrandBanks for comment.

GrandBanks is led by Managing Partner Charles “Charley” Lax, who previously co-founded Softbank Venture Capital. Lax declined to discuss fund-raising, citing regulatory restrictions, but he he did say GrandBanks is expecting multiple liquidity events this year and is in advanced negotiations to make its first investments out of the new fund. In addition to Lax, the firm’s partnership is comprised of General Partners Ryan Moore and Tim Wright.

GrandBanks raised $125 million for its first fund in 2000. That vehicle has invested about $77 million in 14 companies to date, according to Thomson Reuters (publisher of PE Week).

An early stage investor, GrandBanks primarily focuses on software and services, where it has backed seven companies. It has also invested in three Internet-related companies, three companies in the communications and media space and one in computer hardware, according to Thomson Reuters.

GrandBanks doesn’t have a home run to its name, but it can point to a couple of exits. Two of its portfolio companies have been acquired, Colubris Networks and Enpocket, and a third, GlassHouse Technologies, is in registration for an IPO

Colubris, a wireless LAN provider for enterprises, was purchased in August 2008 by Hewlett-Packard for an undisclosed amount. It had previously raised about $52 million from GrandBanks, DCM, Prism VentureWorks and other investors.

Enpocket, which develops mobile programs for advertisers, was purchased by Nokia for an undisclosed amount in September 2007. Enpocket had previously raised a little more than $20 million from GrandBanks, BlueRun Ventures (formerly known as Nokia Venture Partners), Dolphin Equity Partners and Thule Investments.

GlassHouse, a provider of data protection and management services to Fortune 100 companies, registered to go public in December 2007, hoping to raise $100 million. For whatever reason, the company wasn’t able to make it out last year, and its prospects don’t look good for this year with the IPO market in a deep freeze. It has from raised a total of $75 million from close to a dozen firms including GrandBanks.

Separately, GrandBanks also had one of its portfolio companies merge with another VC-backed company. Concentric Visions, a developer of rich media content management software for the enterprise, merged in 2002 with Outstart, which makes a software platform to deliver learning content. Concentric had previously raised just under $10 million from GrandBanks, Internet Business Capital and Sigma Partners.

GrandBanks has since made a follow-on investment in Outstart, which has raised just over $36 million to date. —Dan Primack and Lawrence Aragon