The latest fund will be a venture-only effort, according to published reports, and the filling shows only venture-related investors as fund promoters. Menlo Park, Calif.-based Morgenthaler had previously invested in buyout and venture deals from the same fund. The buyouts side of the business will likely be on the market for its own fund in 2009, according to published reports, though the target is unknown.
The new venture fund may see less of Partner Gary Morgenthaler, the son of firm founder David Morgenthaler. Gary Morgenthaler is not listed as a promoter or executive officer on the regulatory filing associated with fund IX, indicating he may be taking a less active role. The firm lists Gary Morgenthaler as one of nine IT partners on its website. The firm also invests in life sciences.
Firm spokesperson Tom Gibson says that the younger Morgenthaler “will continue to be involved in Morgenthaler’s next fund and serve on the boards of his portfolio companies.” Gibson, citing regulatory restrictions, declined to clarify Morgenthaler’s involvement.
Morgenthaler joined the firm in 1989 after co-founding Ingres Corp., a relational database software company. He has focused on networking and communications startups, backing such companies as storage network company BlueArc (which is in registration for an IPO), broadband access system maker Catena Networks (which was sold to Ciena in 2004) and smart dust wireless sensor company Crossbow Technology.
Gary Morgenthaler was also a vocal participant in the Net Neutrality debate two years ago, suggesting that a possible opportunity for compromise would be allowing people to pay for better service on bandwidth intensive applications such as Skype.
Another investor not listed on the regulatory filing is life sciences and tech investor Greg Shaffer, who has been with the firm for 15 years. Shaffer is leaving to pursue non-profit ventures, according to reports. He will be letting go of his board seats over time. The filing lists Theodore Laufik, Robert Bellas, James Broderick, Ralph Christoffersen, Kenneth Gullicksen, Andrew Lanza, Gary Little, Robert Pavey and Henry Plain as investors in the ninth fund.
The firm expects to raise $72 million in fees over the life of the fund, which works out to 1.8%, assuming a 10-year window. Among its limited partners is the University of Texas, which committed $40 million.
The firm’s previous fund, a $450 million buyout-venture hybrid raised in 2005, has seen one of its 23 portfolio companies acquired and has another in registration, according to Thomson Reuters (publisher of PE Week).
Morgenthaler Fund VII, raised in 2001, is underwater, according to data from the California Public Employees’ Retirement System. Of the state pension plan’s $10 million commitment, only $8.9 million remains, according to CalPERS.