VC fund briefs, week of April 21, 2008

InterWest to raise 10th fund

InterWest Partners will soon begin raising its 10th fund with a $650 million target, according to VentureWire. The venture firm first disclosed the plan to LPs during its annual meeting earlier this year, and plans to begun formal fund-raising in late July or early August.

InterWest raised $606 million for its ninth fund in 2004. That fund has invested in at least 24 companies and has had one liquidity event, according to Thomson Reuters (publisher of PE Week). Fund IX portfolio company EnteroMedics Inc. (Nasdaq: ETRM), which makes medical devices to treat obesity, went public last November.

Limited partners in past InterWest funds include the California State Teachers’ Retirement System, Illinois Municipal Retirement Fund and Pennsylvania State Employees’ Retirement System, according to Thomson.

RiverVest rises with $75M

RiverVest Venture Partners, a St. Louis-based venture fund that focuses on life sciences and medical devices, has held a final close on its second fund with $75 million in commitments. Its first fund, raised in 2000, had $45 million in LP commitments, plus leverage from the Small Business Administration which boosted the total to $89 million.

The first fund has had five liquidity events to date. One of its portfolio companies went public, Cyclacel Pharmaceuticals Inc. (Nasdaq: CYCC), and four were acquired: Auxeris Therapeutics Inc., Cabrellis Pharmaceuticals Corp., Conforma Therapeutics Corp. and Velocimed Inc., according to Thomson. In addition, two of its portfolio companies are currently in registration to go public: CyDex Pharmaceuticals Inc. and Salient Surgical Technologies Inc.

Of the 10 companies that remain in the first fund’s portfolio, eight are “fully funded to profitability or an exit,” RiverVest said in a prepared statement.

The firm did not disclose the names of its limited partners, but at least one in the second fund is The Ohio Capital Fund, according to Thomson Reuters.

RiverVest co-founder Jay Schmelter noted that half of the 16 investments made by the firm’s first fund were sourced in the Midwest. “This strategy is appealing to institutional investors, who don’t like narrow geographic limits but do like the attractive valuations available in the Midwest,” Schmelter said in a prepared statement.

FTVentures closes fund III

FTVentures has closed its third fund with $512 million in capital commitments. The bi-coastal firm will invest between $10 million and $60 million in software and services companies seeking to finance organic expansion, recapitalizations, build-ups and buyouts.

FTVentures had raised $423 million for its second fund in 2001, and was said to have targeted fund III at $600 million.

For its previous two funds, the firm raised money almost entirely from American International Group Inc., Bank of America Corp., Citigroup Inc. and HSBC Holdings PLC, which are also investors in the current fund.

New limited partners in fund III include Liberty Mutual, Skandia Insurance, Nordea, PartnerRe, Capital One, Fannie Mae, Barclays Global Investors, New York City Retirement Systems, RHM Group, New York State Common Retirement Fund and Kamehameha Schools.

FTVentures’ recent exits include the sale of Digital Harbor Inc., an information-integration software company; the sale of Capital Stream Inc., a maker of front-office automation software, for $40 million; and the sale of risk-management software company Actimize Inc. for $280 million.