Sevin Rosen fancies Texas

Sevin Rosen Funds may have abandoned plans to raise a new fund, but the venture firm has not abandoned the Lone Star State.

Since mid-October—when Sevin Rosen pulled the plug on fund-raising for its 10th fund and sent a letter to limited partners saying that the VC model was severely damaged and that there was too much money chasing too few deals—the firm has invested $22.5 million in 12 companies, according to Thomson Financial (publisher of PE Week). Seven of its 12 investments are in Texas-based companies, or nearly 60%, and only three are associated with investors from the firm’s Palo Alto, Calif.-based office. Historically, the firm has invested nearly half of its funds in California-based companies while 33% has been invested in Texas-based companies. The bulk of its remaining deals are usually elsewhere in the United States, and the firm has invested about a half-dozen times internationally.

The increased focus on Texas recently has created some discord between Sevin Rosen’s Dallas and Palo Alto, Calif., offices, according to sources close to the firm. As PE Week reported in October, some of the internal partnership problems concern how the Dallas partners have simply produced better returns that their Silicon Valley counterparts. For example, Dallas-based General Partner Jon Bayless has the best overall performance at Sevin Rosen while Palo Alto, Calif.-based Steve Domenik has the lowest.

The firm declined to comment about its current operations, the fact that the majority of its deals were coming out of Texas, or about its future plans.

About a month ago, General Partner Steve Dow sent an email to PE Week to say that the firm is not ready to talk, but that “…the VC environment has not materially changed or improved” since the firm pulled back plans to raise fund X in October.

One thing that has changed is the firm’s website, which was redesigned in the past couple of months. The firm has also added William Paiva as a life sciences venture partner operating out of Dallas.

Sevin Rosen has invested less than 20% of its $305 million ninth fund. The firm raised fund IX in 2004 and has invested about $58 million in 12 companies, according to Thomson Financial.