Summit Ventures VI Attracts Sizable Sum –

Carrying the mega-fund trend into venture capital territory, Summit Partners last month wrapped up Summit Ventures VI LP at $2.085 billion, more than doubling its predecessor fund, which raised $1 billion in 1998.

Although the firm is primarily considered a VC firm, Summit Ventures VI will seek to acquire both minority and majority stakes investing between $10 million and $200 million in companies with revenue that have reached profitability and have never raised prior professional capital, said Bruce Evans, a managing partner at the firm. The fund, like Summit’s other private equity funds, will commit capital to various stages of private equity from later-stage VC to management and leveraged buyouts specifically in technology, — which will make up approximately two-thirds of the investments ? health-care, consumer products and other emerging growth industries.

In previous funds, later-stage VC made up between two-thirds and three-quarters of investments, with buyouts making up the difference, said Evans, and this fund will likely continue that trend.

Summit, which has offices in Boston and Palo Alto, Calif., began marketing the new vehicle in October and saw 90% of the capital raised by the first close, held in December. The fund was capped in January at $2 billion from outside investors, then the general partners committed another $85 million.

Despite the fact that the GPs decided to up the carried interest rate to 25% from 20% in order to “fully incentivize all levels of partners down to senior associates,” according to one source, the fund had no problem attracting investors.

Evans said the fund attracted “a lot of support from long time investors,” but also drew some new limited partners. Investors in Fund VI are made up of public and private pension funds, university endowments, financial institutions, corporations and previously financed Summit entrepreneurs. Summits’ more than 90 current LPs include Adams Street Partners, Peppertree Partners, General Motors, Bell Atlantic, First Union, Harbourvest Partners, Harvard University and CalSTERS.

Summit Partners is currently investing the tail-end of Fund V before investing any of the newly raised capital. Evans expects Fund VI to begin investing in the next quarter.The firm’s track record and Summit Ventures VI’s strategy to invest in later stage companies rather than early stage growth capital — as the $170 million Summit Accelerator Fund does — has attracted many investors who would otherwise be hesitant.”Each fund they’ve raised to date, with the exception of the this one because it’s so new, has been top quartile,” said one returning investor. “That gains a lot of trust. And unlike a lot of veteran fund managers, [Summit] didn’t get caught up in the [dotcom] investment frenzy last year.”

Summit Partners invests in all forms of private equity through six funds that include two subordinated debt funds with approximately $500 million, the Summit Accelerator Fund and the $1 billion Mt. Everest Fund LP, a hedge fund focused on publicly held securities.

Christa Fanelli can be contacted at