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SBV Eyes $75M Inaugural Vehicle

SBV Venture Partners is aiming for a late fall or early 2001 second close on its inaugural fund and that fund’s companion vehicle, said Jacques Vallee, a principal with the firm.

The two funds – Sigefi, Burnette & Vallee I and Sigefi, Burnette & Vallee IA – together will total $75 million and are considered by the firm to be one vehicle, which means they will be invested side-by-side, he added. SBV hit the fund-raising market in the spring of this year and, in July, held a first close on an initial $20 million. Vallee anticipated a third and final close in the spring of 2001.

The new vehicle will focus primarily on network infrastructure companies and firms arising from the convergence between communications and computing.

“We created a map of the fragmentation and intersection of these industries and have identified 10 areas of innovation that could lead to profitable investments,” Vallee said. “We are trying to think about where technology is going and where investments should be made.”

SBV will invest in approximately 25 different companies, with an average investment of $3 million to $5 million over the life of a deal, said Graham Burnette, another principal with the firm.

The fund will try to invest in a balance of start-ups, first round and second round companies. In terms of locale, SBV will scout for deals world-wide, but wants the start-ups it invests in to be close to SBV’s Santa Clara, Calif. office. The fund retains an industry standard management fee and an 80%/20% carried interest structure. SBV’s principals, Vallee, Burnette and the Siparex Group – a French private equity investor – have already put up 1% of the fund’s expected total capitalization.

This new vehicle, though technically a first-time fund, is really a continuation of Vallee and Siparex’s previous efforts with the two Euro-America investment vehicles, which were the result of a partnership between Siparex, Vallee and Adler & Co., a New York-based venture capital firm now know as Vnad Administrative Services.

As the Euro-America funds are in the process of winding down their activities, Fred Adler, founder of Adler & Co. decided he wanted to focus his efforts on Vnad and decided not to participate in any future Euro-America funds. Vallee and Siparex decided to take on a new investment partner in Burnette – who had previously co-founded one Euro-America portfolio company and held executive positions at another.

The firm began its fund-raising efforts by targeting investors in previous Euro-America funds as potential limited partners. Vallee and Burnette declined to identify these investors, but said they were primarily large French institutions and European high-net worth individuals, who provided the bulk of the initial $20 million raised by the fund. The partners are now targeting American investors for the fund’s second close and hopes to attract Asian investors for the third close.

The vehicle has done five deals to date for a total of $3 million, Vallee said. The firm’s investment team currently consists only of Vallee and Burnette, though the two men said they plan on adding an additional principal with operational Internet experience concurrent with the fund’s second closing.