Independence Launches F-O-F

Independence Holdings Partners LLC is preparing a June launch for its $75 million-targeted venture capital fund-of-funds, the firm’s first non-private equity vehicle, said Mark Klein, a managing director at the firm.

Independence has decided to enter the venture market because there are strong managers – investors that have been through more than one venture capital cycle, beyond the dotcom era – raising capital at this point in time. Additionally, market valuations have decreased, creating more opportunity in the space, he said.

Unlike the firm’s previous funds, which were pre-allocated during the fund-raising process, the venture vehicle will be invested over time. The funds in which Independence invests will be diversified in stage focus, geographic preference and industry sector.

Independence will market the fund having specified three or four venture firms that it will invest in, and then select another six or seven subsequently, he said. Although Klein would not release specific names, he did say that Independence plans to pick “high quality established managers, name recognizable VC firms with established track records.”

The $50 million Independence Private Equity Select Fund, which closed in March 1999, backed three funds: Apollo Advisors Fund IV LP; Clayton, Dubilier & Rice Fund VI LP; and Hicks, Muse, Tate & Furst Equity Fund IV LP. Also totaling approximately $50 million, Independence Private Equity Europe, which closed in April, backed Hicks, Muse, Tate & Furst Europe Fund LP, Industri Kapital 2000 Fund LP and Deutsche European Partners IV LP.

Limited partners in the venture capital fund-of-funds will be high-net-worth individuals and small institutional investors, and the general partners will contribute 10% of the fund, Klein said.

The firm is led by Managing Directors Nuno Brandolini and Kevin McCarthy, Chief Operating Officer Jeffrey Gendel and Klein.