Mainspring Capital Partners of Boston is in pre-marketing mode for its inaugural fund, just months after launching as an independent venture capital affiliate of investment bank Lane Berry & Co. Once closed, the vehicle is expected to make growth equity investments in revenue-producing companies that operate within the technology, communications, media and business services spaces.
Target companies will not have received any prior institutional funding.
“The goal is to achieve early stage returns with a later-stage risk profile,” says a source familiar with the firm’s strategy.
From a structural perspective, Mainspring is perhaps best described as a cross between the Sprout Group of the 1970s and 1980s and Summit Partners/TA Associates of the early 1990s. The comparison partially comes from Mainspring’s focus on relatively small companies (similar to Sprout’s focus), which only need between $5 million and $10 million, but also to its affiliated – albeit arm’s length – relationship with an investment bank. The Summit/TA similarity is primarily in terms of generating deal flow, as Mainspring expects that nearly 20% of its opportunities will come through cold calling.
Not surprisingly, the Mainspring management team has a history with Sprout and Summit. Fred Lane was the eighth banker hired at Sprout’s affiliate bank Donaldson, Lufkin & Jenrette, and stayed through the CSFB merger, until leaving to co-found Lane Berry in 2002.
Michael Balmuth spent eight years as a general partner with Summit, and served as co-founder of the VC-focused Summit Accelerator Fund. Mainspring’s third managing partner is Balmuth’s Harvard Business School chum Pat Curran. He had been a partner with Great Hill Partners since 2000.