TVM Offers Pair Of Focused Funds

Following limited partner advice to deviate from its generalist fund strategy in favor of more industry-specific investment vehicles, Techno Venture Management (TVM) is currently in the market with a pair of targeted offerings.

The first fund, which recently held a E70 million (approx. $60.26 million) first close, will be focused on life sciences-related investments, while the second fund, which expects a first close in the third quarter, will concentrate on information technology. Both funds are being pitched with a E250 million (approx. $215.23 million) target capitalization, although the cross-border venture firm is willing to accept up to E400 million (approx. $347.72 million) worth of commitments per fund. TVM V Life Science Ventures is expected to hold a final close by year-end, while TVM V IT will likely conclude fund-raising during Q1 2001.

“The decision to raise two funds was largely driven by the increasing sophistication of our investors who wish to allocate more specifically,” said Hans Schreck, a Munich-based partner with the firm. “We deliberately chose to keep it focused on what we?re good at, however, because those core strengths have helped us avoid some of the not-so-brilliant investments in b-to-b and b-to-c.”

It is important to note that the decision to split funds is not an indication that existing LPs will only sign on for one or the other. Instead, the firm expects most previous backers to sign up for both, with the understanding that the funds will each have different life cycles and return expectations.

“In our last fund, half of our investments were in life sciences, but we finished those much earlier than we finished our IT investments,” said John DiBello, Boston-based partner and COO of U.S. operations with TVM. “It just gives our investors a better sense of what to expect, and they encouraged us to do it.”

TVM has raised five previous funds, the first of which is completely liquidated. TVM II will begin the liquidation process at the end of next month, and will include divestitures of its public portfolio and of a trace analysis equipment developer named Atomika Instruments GmbH, which has been rumored to be a possible IPO candidate on the German public market. Munich-based Atomika is the only major TVM II portfolio company that has neither had a liquidation event nor gone out of business.

The firm?s E300 million (approx. $258.27 million) TVM IV fund is still actively investing until capital is drawn down from the new vehicles. Among the leading LPs on that fund were Alpinvest, Siemens Venture Capital, Kredietbank Luxembourg, Versicherungskasse der Stadt Zürich, Helvetia Patria Versicherungen, the Government of Singapore, Minnesota Life Insurance Co., Dresdner Kleinwort Wasserstein, BT Investment Partners (Deutsche Bank), BHF-Bank, Industriekreditbank, ERC Frankona/GE Capital and the University of Pittsburgh Medical Center.

TVM has offices in Munich, Boston and San Francisco.

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