General partners are continuing to leave the venture capital firms where they made their marks, and the trend seems to be accelerating.
In the past month, word has come that such well-known investors as Tom McConnell of New Enterprise Associates, Todd Brooks of Mayfield and Neal Douglas of Spectrum Equity Investors are all on their way out of their respective firms. The latest additions to this fast-growing list are Todd Dagres and Ravi Mohan, who each have been with Battery Ventures since 1996.
A Battery spokeswoman declined to comment on the situation, but sources familiar with the firm say that the departures will not come before year-end. Instead, Dagres and Mohan – plus another unnamed Battery investor on the West Coast – will be phased out while the firm preps its seventh fund-raising drive early next year. The new vehicle will be pitched with a target capitalization of about $450 million, while Battery also will ask LPs on its $1 billion sixth fund to approve a 15% size reduction.
Dagres and Mohan are the third and fourth Battery VI partners who will not return for Fund VII.
GPs Tony Abate and Michael Darby were laid off last year, along with three venture partners, two back-office investment professionals and two operational employees.
Abate since has turned up as a partner with Waltham, Mass.-based Ironside Ventures (which is currently raising its second fund).
“I think that a lot of this dislocation is coincidence, but there also are some other factors at work,” says Ed Kane, a senior managing director at HarbourVest Partners.
Without specifically discussing Battery or any other firm, Kane says that a combination of factors – such as age-related attrition, shrinking fund sizes and overstuffed billfolds – are contributing to the exodus.
“It’s hard to identify any one thing, because it’s really a combination of everything,” he explains.
He and others also acknowledge that some of the shifts have to do with venture firms putting a greater emphasis on life sciences over information technology.
New Enterprise Associates, for example, has taken three IT-focused GPs off its upcoming fund (see PE Week, Oct. 20).
The Sprout Group is an even more salient case, where the firm will simply spin out its health care team and let the IT unit wither way after its current portfolio’s lifecycle is completed (See story, p. 1).
“The quality of deals in the life sciences sector clearly has increased, and I’ve certainly noticed the trend of firms paying more attention to it [through partnership changes],” says Joe Lacob, a partner with Kleiner, Perkins, Caufield & Byers (KP).
KP recently hired a new life sciences investor in former JPMorgan Partners principal Risa Stack, but Lacob declined to say whether or not KP was planning to decrease its number of IT-focused partners. Numerous sources have said that KP currently is floating various target sizes for its next fund.
Partner Kevin Compton says the firm will start formally meeting with LPs early next year.
Venrock Associates also is experiencing some partnership changes as it seeks commitments for its fourth fund. The New York-based firm recently took managing general partner David Hathaway and general partner Joe Casey off its Web site, which comes just months after GP Tom Frederick announced his resignation.
Also gone is Terry Garnett, who left Venrock to launch a new technology-based buyout firm with former ComVentures partner David Helfrich. The Redwood City, Calif.-based shop, called Garnett & Helfrich Capital, is currently hoping to secure between $200 million and $250 million for its debut fund, although market reaction has been mixed.
Separately, Managing Director Bill Burnham is leaving Mobius Venture Capital due to “reductions in the current and planned size of Mobius VC’s funds under management,” according to Heidi Roizen, a Mobius VC managing director.