Less than two years after celebrating its 25th anniversary, the partnership of
The move comes about 15 months after General Partner Steve Dow, who is based in Sevin Rosen’s office in Palo Alto, Calif., leaked a letter written to the firm’s limited partners to The New York Times, saying it halted fund-raising for a $300 million 10th fund because it was concerned that the early stage venture model was broken.
Dow’s partners in Austin and Plano, Texas, apparently disagreed, as they plan to raise a new fund. Press reports say it will have a target of about $300 million. The firm’s partners did not return calls seeking comment.
There is no word yet on what the California partners will do. Dow, Steve Dominik and John Oxxal are still listed on the firm’s website and recognized for their role on the boards of several Sevin Rosen portfolio companies. General Partner Nick Sturiale left to become a managing director with the
Sturiale, who started work with Carlyle last week, says that he made the move because, “Clearly there were conflicting views [at Sevin Rosen] about what the strategy should be and there were different opinions about ways to best take advantage of the current venture environment. I felt like it was time for me to do something new.”
Sturiale noted that despite the disagreements that led to the split at Sevin Rosen, “These were all perfectly amicable disagreements. I would call it an amicable separation in many ways.”
Sturiale, in his early 40s, was the firm’s youngest partner. He joined Sevin Rosen in 2000 after leaving his post as CEO and director of Fremont, Calif.-based Timbre Technology, a developer of semiconductor design software. Dow mentored Sturiale during his initial two years as a senior associate before promoting him to partner.
Sturiale’s big hit was
At Carlyle, Sturiale says he will make venture and growth equity investments in tech companies, with an emphasis on Web and enterprise software deals. Why join a private equity firm as opposed to a VC firm? “The assets we can bring to bear to help entrepreneurs build their businesses is staggering,” he says. Sturiale adds that it isn’t clear what a traditional early stage VC firm is anymore. “All the top early stage firms are multistage and multigeography players,” he notes.
Outside of Sturiale, no one else in Sevin Rosen’s Palo Alto office has actively invested in the past year. The partners in Texas did three new deals in the first half of 2007, according to Thomson Financial (publisher of PE Week). Historically, the firm invested about 44% of its funds in California-based companies and 33% of its funds in Texas-based companies.
PE Week reported that the firm’s decision to hold off on fund-raising was related to disagreement between the two offices. That disagreement may have arisen from the difference in performance between the two groups. With the exception of XenSource, the Texas investors had had better returns.
In addition to XenSource, one of the firm’s most successful exits in recent years had also been thanks to Citrix. Sevin Rosen had seeded WAN optimization company Orbital Data Corp. in late 2003 with $2.1 million and invested again with Redpoint Ventures in a $12 million round six months later. Citrix bought Orbital Data in April 2006 for $50 million.
Sevin Rosen celebrated its 25th anniversary in March 2006. Founded by L.J. Sevin and Ben Rosen, the firm backed a host of famous tech companies, including Compaq, Cypress Semiconductor, and Electronic Arts, Lotus Corp.