VSP Loses Two General Partners

VSP Capital has lost two of its five general partners in the last six months, and one of its limited partners is seeking to sell its position, PE Week has learned.

It was only two months ago that the small San Francisco venture capital firm closed on its third fund, a $185 million vehicle targeting early stage consumer and enterprise technology companies.

Just before that close, General Partner Tony Conrad resigned. He had been a GP with the firm since 2000. Conrad left in November and has since launched a stealth, RSS-related startup in San Francisco. Conrad declined comment, saying, “I closed on my round of financing last month and I’m very focused on my new venture. As I’m sure you can understand, I’m just not in the flow of what is or isn’t happening at VSP anymore.

Additionally, Vince Vannelli, who has been with VSP since 2002 and was promoted from venture partner to general partner last November, resigned in late March, according to several sources familiar with the situation. Vannelli says that he is still working with VSP, but he declined to say whether he tendered his resignation.

Meanwhile, Duke Management Co. has contacted investors to discuss selling its shares in VSP, according to two sources close to the matter. A Duke manager who asked not to be identified denied that the LP is trying to sell its VSP stake. “We firmly support our commitment in VSP,” the manager says. Asked if Duke was familiar with any trouble in the partnership dynamics within VSP, the manager responded, “I can’t comment about that.

Several of VSP’s other LPs, which include Adams Street Partners, Horsley Bridge Partners and the Regents of the University of California, did not respond to PE Week’s inquiries.

The GP departures and rumors of disgruntled LPs appear to stem from friction among personalities at the firm. PE Week emailed an interview request to VSP founder and Managing Partner Joanna Rees-Gallanter last Friday, but as of last night she had not scheduled an interview time.

VSP, founded as Venture Strategy Partners in the mid-1990s, has four GPs: Rees-Gallanter; John Hamm, who was hired last September; Vannelli; and Matt Crisp, who joined the firm as an entrepreneur-in-residence in 1999 and was promoted to partner the following year. Also, VSP brought aboard Dana Settle as a partner this year. Most recently, she was a venture partner at Mayfield.

In addition to Vannelli and Conrad, several other investors have come and gone in VSP’s seven-year life: David Likins joined VSP in 1999, was promoted to general partner in 2000 and left the following year; Tony Kamin worked at VSP as a venture partner from 1998 to 2003; Jeff Braun joined as a venture partner in 1999 and left in 2000; Bob Hambrecht joined as a venture partner in 1999 and left in 2002; and Dan Kranzler was a venture partner from 1999 to 2002.

Likins, now president of Kirkwood Mountain Resort and Development Co., couldn’t be reached for comment. Kamin is currently president of a private-equity company, and a management services startup that caters to the biotech and medical device field. Kranzler is the founder and CEO of Mforma, which is building a system of mobile content to give cell users access to the same entertainment, including games and movies. Messages to both Kamin and Kranzler were not returned.

VSP Capital has made at least three stealth investments from its third fund, including in what Rees-Gallanter characterizes as a next-generation search company. The other two are an instant-messenger “enhancing” startup and a marketing services company.

Email Constance.Loizos@thomson.com