Ironside Tables New Fund as Abate Goes

Ironside Ventures tabled its fund-raising effort last week, following the resignation of general partner Tony Abate. The Waltham, Mass.-based firm may still restart the process sometime next month, but after it explores various strategic opportunities.

Abate joined Ironside in early 2003, after he was “downsized” from his general partner position with Battery Ventures. The firm was still finding its legs after its 2000 spinout from Canadian insurer Manulife Financial Corp., and it was believed that the addition of Abate would help secure outside institutional capital for a $150 million-targeted third fund. Its first fund consisted of $135 million from Manulife, while it raised another $25 million from individuals and small institutions as part of the spinout.

The investment strategy would continue to focus on seed deals and early stage opportunities on the East Coast.

“This is a good time to be putting money to work, and we’ve aligned the amount of capital we’re looking for with the team size and industry focus,” said Abate, in a November 2003 interview with PE Week.

Prospective limited partners, however, weren’t nearly so positive.

Ironside secured several commitments from reputable institutions, but still hadn’t reached the $150 million mark after a year of fund-raising. By early February, rumors began that Abate was thinking of leaving, which did little to entice new investors.

The decision to postpone – or possibly cancel – fund-raising wasn’t directly tied to Abate’s resignation, although it certainly would have made immediate continuation quite cumbersome. Not only would Ironside have been required to draw up new paperwork, but it also would have needed to soothe LP concerns related to the departure of one-quarter of the Ironside general partnership.

Bill Sheehan, a co-founder and general partner with Ironside, says that the firm currently is looking at a number of strategic options, but declined to provide further detail. A final decision, he said, likely would be forthcoming in the next four to six weeks. Abate says that the split is amicable, but declined formal comment on his “personal reasons” for leaving.