Prism Closes Shy Of $450M Goal

After fund raising for nearly a year, Prism Venture Partners is expected to announce Monday that it has closed its fourth investment vehicle with $429 million. The Westwood, Mass.-based firm held a $300 million first close with returning limited partners in Q2 2001, but didn’t secure its final new buyer until two days ago.

Prism Venture Partners IV was marketed with a $450 million upper capitalization target, but firm co-founder Bob Fleming isn’t spending too much time lamenting the slight shortfall.

“In this environment, we’re delighted to finish within spitting distance of our original maximum target,” says Fleming, a general partner with Prism. “It’s [approximately] $90 million more than our last fund so we’re fine with it.”

The added bulk, however, may be just about all there is to distinguish Fund IV from its predecessor. The new vehicle plans to follow Prism’s time-tested investment strategy of pumping approximately 60% of its capital into early-stage communications and IT infrastructure plays, with the rest going to the life sciences sector.

So far the new fund has made seven investments. Its burgeoning portfolio includes wireless LAN product provider IceFyre Semiconductor Inc., 3-D content developer Kaon Interactive Inc. and secure networking provider Ingrian Networks Inc.

“The biggest thing people were looking at when we were raising our fund was not just how much money we had made, but how we had made it,” Fleming said. “What played into our favor was that we made it the old-fashioned way with first round deals across a diversified base of industries.”

Approximately half of the new LP commitments come from state or state-related pension funds, with the rest coming from a mix of corporations and endowments. Prism’s previous fund had been the $338 million Prism Venture Partners III, which closed in March of 2000. That fund is not adding on any new companies, although it is still making follow-on investments for its existing portfolio.

Dan Primack can be contacted at Daniel.Primack@tfn.com