Tejas Ventures Closes Doors

Tejas Venture Partners of Austin, Texas, is in the final stages of shutting down, after failing to secure enough capital commitments for its inaugural fund.

Managing Director Robert Adams says that the decision to close shop was made about one month ago, but that he had held off on public comment until all committed LPs had been notified.

The firm was launched in July 2004 by Adams and Chris Grafft, a pair of Austin Ventures alums who had been intimately involved with that firm’s AV Labs incubator affiliate. Adams founded AV Labs, while Grafft helped its portfolio companies with board-level advising.

Similarly, Tejas also wanted to focus on AV Labs-type seed and early stage deals in the software and software-enabled services sector, although the partners also were amenable to select expansion-stage deals. The firm’s website said: “We are comfortable seed funding and adding value to two talented entrepreneurs with nothing but a set of slides as well as follow on investing in high revenue, rapidly expanding companies that have achieved customer traction and significant market presence.”

Adams and Grafft began fund-raising with a $75 million target and a $100 million maximum cap. They received a $25 million commitment from the University of Texas Investment Management Co., and also received a bit more from undisclosed investors. It soon became clear, however, that Tejas was going to fall far short of its goals.

“Everyone out there claims to have emerging manager programs, but very few emerging managers have actually gotten funding, except for Shasta Ventures, Ignition Partners and Union Square Ventures,” Adams says. “Those groups all have GPs with 20 years of combined experience and 15 exits, while we have 15 combined years of experience and just a few exits.”

While at Austin Ventures, the duo invesed in Motive Inc. (Nasdaq: MOTV) and Waveset Technologies Inc. (which was acquired by Sun Microsystems), among others.

The first report of Tejas’ closure was published on Thursday in the Austin-American Statesman. Tejas did not make any investments, so the shutdown has been relatively easy. Adams says that he plans to spend most of his time teaching at the University of Texas, while Grafft is expected to retire.

Email Daniel.Primack@thomson.com