Believing that it now has enough capital under management to be globally competitive without becoming unwieldy, Jerusalem Venture Partners (JVP) earlier this quarter held a $400 million final close on its fourth investment vehicle. The fund had originally been marketed with a target capitalization of between $400 million and $500 million. The firm held a $350 million first close back in July (See PEW 7/30/01).
“It’s no secret that a bunch of people were nervous about a lot of different issues when we were raising this fund,” said Erel Margalit, managing partner and founder of JVP. “At some point we just felt it was best to close and move on.”
The new vehicle will concentrate on early-stage investments in the five core areas of optical networking, data communications, wireless communications, e-business infrastructure and Internet service infrastructure. It expects to invest approximately $20 million over the life of each portfolio company, although it may spend more to participate in creative financings that could give its companies a competitive advantage. For example, JVP partially funded a reverse merger in October which helped high-speed business ISP Cogent Communications Inc. acquire Allied Riser Communications Corp., a public broadband network services company.
JVP also plans to help its portfolio companies by forming business development alliances in Asia. Although this effort may eventually take the form of select investments, it is currently a matter of opening new sales routes to equipment providers that have been hit hard by the saturated U.S. market.
“Asian carriers are buying up equipment very quickly, so we’re coordinating a joint effort of several companies to penetrate that market,” Margalit said.
Approximately 40% of JVP IV’s investments will be made in U.S.-based companies, with the rest being split up between European and Israeli firms. In conjunction with the fund close, JVP announced that General Partner Glen Schwaber has returned to Israel from New York to run JVP’s Jerusalem office. Yuval Cohen, who had run that office, will scale back his activities, and now serve in the role of venture partner. The firm’s London office will continue to be led by Laurel Bowden.
So far, the fund has already invested approximately $50 million in eight companies.
Looking For Returns
Although JVP failed to reach the upper limits of its fund-raising target, it nonetheless managed to sign on some big-name limited partners for JVP IV.
Among the new players were HarbourVest Partners, Adveq Management AG, Government of Singapore, Jafco Co., Temasek and the Technion, a leading technical university based in Haifa, Israel.
Return investors included France Telecom, Infineon Technologies AG, Boeing Co., Nortel Networks Corp., Reuters PLC, Columbia University, MIT, Flag Venture Partners, Horsely Bridge Partners, AXA, Bank Leumi and Hebrew University.
JVP was last in the fund-raising market in 1999 when it secured $161 million for JVP III.