Psilos Group Managers, a New York-based health-centric venture capital firm, has closed Psilos Group Partners II SBIC L.P., a $75 million subsidiary fund of its existing Psilos Fund II.
The firm applied for a Small Business Investment Company (SBIC) license from the Small Business Administration (SBA) in March 2001 and finally received it in May 2002. For every dollar of capital Psilos put into the fund, the SBA provided two-$25 million came from Psilos Fund II and the rest of the fund from the SBA.
While the firm’s previous funds have invested in early-stage companies, Psilos II SBIC will place more emphasis on later-stage health care and device companies that are close to being cash flow positive. “It makes more sense in this environment,” says Jeff Krauss, a general partner at the fund. “Right now we think there is more value to be had in more established companies.”
The fund expects to invest $2 million to $5 million in 10 to 15 companies over the next three years. To date, the Psilos II SBIC has already made two investments. The first investment was made into deNovis Inc., a claims processing technology company for the health-care administration marketplace. deNovis recently entered into a multi-year strategic alliance with IBM, in which deNovis’ technology will be integrated with IBM’s to establish a next generation claims processing system. Empire Blue Cross and Blue Shield is expected to be the system’s first client.
Psilos’ most recent investment was made into Comprehensive Neuroscience Inc., a site management organization focused on the central nervous system. Krauss says the fund is looking at several more deals and expects to hold additional closings soon.
Prior to Psilos II SBIC, Psilos Fund II raised approximately $80 million in September 2000. Other than the $25 million that went into this fund, the rest is fully invested. Psilos Group, founded in 1998, has more than $230 million in capital under management and has invested in 27 companies since inception.
Contact Danielle Fugazy