Passing the halfway mark after a year of fund-raising, PA Early Stage Partners last week closed on $68 million, with a $100 million final close planned for its third fund in July.
PA Early Stage Partners III is the most recent offering from the Wayne, Pa.-based firm that has raised two funds and a total $150 million since 1998.
Like its predecessors, this fund will concentrate on early-stage technology plays, making an initial commitment between $100,000 and $5 million to each portfolio company. The firm expects to take a seat on its portfolio company’s boards of directors and lead its first institutional round of financing. It will invest up to $6 million over the course of a company’s life cycle.
The fund plans to make half its investments in the information technology arena, and the other half in the life sciences sector. About 70% of the firm’s investments are in Pennsylvania, while the remainder is concentrated in the Mid-Atlantic region from Boston to Washington, D.C. This fund will retain the firm’s geographic focus.
“The mid-Atlantic region is fertile ground for building both IT and life sciences companies,” says PA Early Stage Managing Director Mike Bolton. It is home to research institutions like Carnegie Mellon University and Penn State University, as well as the corporate research arms of Lucent Technologies, Motorola Inc. and Verizon Communications.
“This marketplace is unusually attractive for early-stage deals,” Bolton says. “There has been a hiatus in innovation that hasn’t been able to draw in funding and there’s built-up demand on the part of very interesting companies. There are strong management teams ready to go, so there’s the best of the best out there for us to look at.”
Bolton, a founder of the firm, formerly ran Lehigh University’s fund-raising and technology transfer program. Additionally he founded the Ben Franklin Technology Center at Lehigh University. He also serves on the advisory board for the Wharton School’s Center for Entrepreneurship at the University of Pennsylvania. Rob McCord – a former vice president with Safeguard Scientific and a senior fellow and adjunct faculty member at the Wharton School – and Paul Schmitt – the former chairman and chief executive of Chrysalis International Corp.- co-manage the fund alongside Bolton.
Recent hits in the firm’ portfolio include AANetcom, a fabless semiconductor company, which was sold to PMC-Sierra, and OraSure Technologies, an oral fluid diagnostics company that was listed on the Nasdaq and then merged with another publicly-traded company in a $255 million stock deal.
The 15 limited partners in PA Early Stage Partners III include Pennsylvania State Employees’ Retirement System and Philadelphia Pension Fund.
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