Industry icon John Mumford has spoken. After months of avoiding press inquiries about the status and future of Crosspoint Venture Partners, Founding Partner Mumford on Tuesday told Private Equity Week that Crosspoint has no plans to raise another fund, and any decision on the subject is years away.
?We?re going to be investing the 2000 fund for the next several years, and we?ll decide what to do [regarding a new fund] at that point,? says Mumford, who founded the firm in 1970. ?It will take a long time on an investment model that looks like pre-1997, which is where the world is today.?
The fact is, the firm still has a lot of money left to invest, since it raised two funds totaling $1.1 billion in 2000. The first was $850 million Crosspoint Venture Partners 2000 LP. It was followed by $250 million Crosspoint Ventures 2000 Late Stage Fund LP.
The firm is very much alive, having made three new investments this year, Mumford says. The most recent deal was a $4 million A round in April for Iteration, a developer of information delivery software. The round was co-led by Crosspoint General Partner Jim Dorrian, who joined Iteration?s board. Prior to that, the firm participated in the second closing of a $17 million third round for fabless chip company eSilicon Corp. in February. Seth Neiman, a Crosspoint managing partner, sits on eSilicon?s board.Mumford says the firm closed a third deal this week, but he declined to reveal the name or any specifics.
Looking for Clues
LPs have been frustrated by Crosspoint?s lack of a clear message about its future. They are eager to put more money to work in the firm, which, according to past interviews with partners, has had several funds that have performed in the ?top quartile? of all venture funds.
?Ever since we gave back money on the 2001 fund we get a call a day from limiteds trying to figure out how in the hell to get in the best position [for a new fund],? Mumford says. He may have broken his silence in an effort to make it clear to LPs that there is no new fund on the horizon.
Crosspoint stunned its limited partners in 2000 when it told them that it would not call down their commitments for a $1 billion 2001 fund. Although skeptics questioned the move at the time, it turned out to be prescient: This year several top tier firms, bowing to LP pressure, have trimmed their $1 billion-plus funds, including Accel Partners, Charles River Ventures and Redpoint Ventures.
Even though they now appreciate Crosspoint?s thoughtful decision in 2000, LPs are baffled as to why it hasn?t raised a modest fund since then. They speculate that the firm plans to phase out in the next few years. ?I guess they weren?t very good at succession planning,? says one LP who asked not to be named. ?It now seems very unlikely they will raise another fund.?
But another LP says it?s too early to jump to conclusions. ?They lived through an insane bull market and they?re sort of taking a breather. They?ve turned down the overhead and are just riding it out.?
One venture capitalist who knows the Crosspoint partners says he?d be ?surprised if they packed it in entirely. They all love starting companies, so I think they?re keeping their options open.?
As for Mumford, who is 58, it isn?t even clear if he?s going to get out of the VC business altogether, since he?s so passionate about what he does, says the VC, who asked not to be named.
Mumford says he expected to be retired by now. ?I?ll have officially retired after the 2000 fund completely,? he says. ?There was a [retirement] party for me with [country singer] Clint Black up at the Paul Masson Mountain Winery two years ago. I hoped to get out of here earlier, but with the market changing, who knows how long that?s going to take.?
Mumford contends that Crosspoint is well positioned to ride out the downturn. ?We?ve got the advantage that we don?t have young associates and interns and things like that,? he says. ?We?ve got five very senior level general partners, all with operating backgrounds, who?ve been around a long time and, thank God, have made a lot of money and enjoy the business. We?ll decide what we?re going to do later.?
Besides Mumford, Dorrian and Neiman, the firm?s other members are General Partner Bob Hoff and Managing Partner Rich Shapero. Just two years ago, the number of investment professionals was eight. Apparently, three members of the team didn?t want to hang around to find out what the final decision would be.
LPs have been concerned about the departures of the partners, who looked like they would play a key role in the group that would succeed Mumford. The first to bail was Bob Lisbonne. A general partner since 1999, he left in June 2001 to join Matrix Partners.
Seeing a GP depart may have helped partners Steve Foster and Eric Harrison decide their futures.
Foster, who joined Crosspoint in 1998, walked away in the fall of 2000 to become a general partner at TPG Ventures, an affiliate of Texas Pacific Group. Harrison, who joined Crosspoint in late 1999, accepted an offer from the California Public Employees? Retirement System (CalPERS) in March 2001 to be managing director of a newly formed $526 million private equity fund called Global Innovation Partners. The fund does real estate-related buyouts and later-stage investments.
Based on comments he made at a conference in December 1999, Harrison figured he?d be at Crosspoint for a while. “We’re investing today for five years out,? he said at the Jupiter/Net Market Makers “Ground Zero 4” conference. He was gone in a little over a year.
Contact Lawrence Aragon at: Lawrence.Aragon@tfn.com
Tom Stein contributed to the reporting of this story.
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