Summit Partners raised $2.1 billion last year for its seventh investment fund, but now, faced with a drought of late-stage technology deals to fill its portfolio, the Boston-based firm has made an overall shift in its investment strategy. Rather than straight venture capital deals, the firm now is also focusing on other types of private equity investments – spin-offs and LBOs among them.
To drive its effort, the firm has added seven associates since January, many of them with investment banking and securities industry pedigrees, and is planning to add several vice presidents and other senior-level investors to its roster before the hiring spree ends.
“Our objective now is to invest money and invest wisely and do it in a reasonable amount of time,” says Bruce Evans, the firm’s managing partner. “We have historically generated new opportunities by forming relationships with entrepreneurs and CEOs of private companies and found companies to invest in through those relationships. As the fund has grown in size, there are a number of things within our reach – LBOs, spin-offs and buyouts. Those are more complex transactions, and because of that, it makes sense to build up the practice and with the investment intermediaries out there.”
Alexander Harrison, previously at Goldman Sachs & Co., James Waskovich, formerly with Wachovia Securities, and Theodore Wagenknecht, most recently with UBS Warburg, have joined the firm’s Boston office as associates. Brad Murray, most recently of Akamai Technologies, is Summit Partners’ newest Palo Alto, Calif.-based associate.
Although a long-time late-stage venture investor, the firm is building a practice that will make other sorts of private equity investments that fall into the $10 million to $250 million range. Although the firm will not disclose how much investment capital it has already deployed out of its 2001 fund, it does expect to have the fund fully invested within five years, despite the slowdown in the technology sector.
“Two-thousand-one was a slow year and 2002 will prove to be better. We’ve invested more money so far this year than all of last year,” Evans says. “It’s less growth technology funding and more other things.”
At the same time, the firm is also adding weight to both its year-old London operation and to its Palo Alto-Calif.-based early-stage technology fund, the $180 million Summit Accelerator Fund raised in 1999. The London group recently added a new associate to its team – Isabel Linse, formerly of BancofAmerica Securities. With five investors now in London, the firm’s first European outpost is now fully staffed. Greg Goldfarb, former director of Starwood Hotels & Resorts’ Innovation Lab and former Harvard Business School research associate Jonathan Lim joined the Accelerator Fund this spring as associates. They are the final additions to the six-person team.
Contact Carolina Braunschweig