CMGI Inc., through its @Ventures venture arm, has completed initial closes on two separate investment vehicles that will target companies in the business-to-business and business-to-consumer e-commerce industries.
CMGI is the sole limited partner of each fund, which are expected to raise as much as $2 billion in combined capital, said @Ventures General Partner Brad Garlinghouse. Garlinghouse would not disclose how much CMGI has already committed to each fund, only saying that the firm has more than $6 billion in cash and marketable securities and has allocated a substantial amount to each venture fund.
“Our biggest wins have all been pure B-to-B companies, but we have not been perceived as such a big player in the space,” he said. “This is us saying out loud that B-to-B will be an important part of our strategy.”
With The CMGI @Ventures B2B Fund focused on B-to-B, Garlinghouse said @Ventures IV will be more consumer oriented than the firm’s previous funds. The $280 million @Ventures III allocated approximately $3 million to $5 million in e-commerce companies, while Fund IV will commit as much as $15 million to a portfolio company’s first institutional round. The larger size of each fund will also enable @Ventures to commit capital to later-stage investment opportunities.
“Historically, we have not been active in later-stage,” he said. “Now we can start doing deals with larger valuations and devote larger chunks of money.”
Benchmark Capital and Oak Investment Partners have each raised $1 billion venture funds in recent months (PEW, Oct. 4 p. 1). There is a debate within the industry whether funds of that size can capably manage early-stage investment opportunities.
“We are best at identifying early-stage investment opportunities and will still consider seed-stage investments,” Garlinghouse said. “We are lucky to have positive relationships with a number of angel groups and venture catalysts.”
He added that the firm may hire an additional investment professional to assist in the management of both funds.
While @Ventures III raised money from outside investors, including Microsoft Corp. and Vulcan Ventures, CMGI decided to be Fund IV’s exclusive investor, as it was for the firm’s first two funds. Both Fund IV and the B2B Fund will function as limited partnerships, with standard carried interest splits and management fees. CMGI accounted for 19.9% of Fund III.
Garlinghouse said the first two deals from the B-to-B fund are nearly completed and that @Ventures would close several more deals by the end of the year. – B.S.
@Ventures Invests in Gamers.com
@Ventures IV made its first investment Nov. 22, committing $11 million to Gamers.com. Menlo Park, Calif.-based Gamers.com operates a portal for enthusiasts of electronic and traditional games. The company’s founder, Dennis Fong, is a savant of the video game Quake, and has not lost a major gaming tournament since 1995.
“This first investment represents a good contrast between funds three and four,” Garlinghouse said. “We think winners and losers are being defined more quickly on the Internet, and now we have the resources to invest more cash.”
Proceeds from the financing will be invested in recruitment, site development and marketing. Fong, 22, said the portal will help enthusiasts navigate past the more macabre or substandard gaming sites on the Internet.
“It’s not like we’re a bunch of corporate dudes fighting over how to harvest these guys,” he said. “We know what we enjoy and we can build it for everyone else.”