Woodside Fund, an early stage tech fund, is launching its fund-raising efforts for its sixth fund, PE Week has learned. The firm, based in Redwood City, Calif., is looking to raise $150 million, says co-founder Vince Occhipinti.
Occhipinti, who founded the firm in 1983, says he wants to keep the fund small and in line with the size of Woodside Fund V, which raised $146 million in 2002. “We have one of our large investors that wants to double our size,” Occhipinti says. “Inevitably, there will be pressure to oversubscribe.”
Indeed, many venture funds have expanded lately, often at the behest of partners looking to take home bigger management fees. “It doesn’t take a rocket scientist to figure out that we could double our management fees by increasing our fund size,” Occhipinti says.
Most of Woodside’s partners made enough money to keep them comfortable without having to jack up their management fees, Occhipinti says. It helps keep the general partners aligned with the fund’s limited partners, he says. “It’s the carry, not the management fee that matters to our partners.”
Woodside scored a sale last week on one of its long-running portfolio companies, as the medical device company OsteoBiologics was sold to Smith & Nephew (NYSE: SNN) for more than $72 million in cash. The purchase price was 22X the company’s 2005 revenue. The startup was funded from Woodside’s third fund, a $41 million vehicle raised in 1995. The firm made 32% of its fund back on the sale of OsteoBiologics, Occhipinti says.
Occhipinti expects many of the fund’s previous investors to return for fund VI. Previous LPs include McGill University Endowment, BP’s pension arm, Vanderbilt University Endowment and Ontario Teachers’ Pension Plan. Occhipinti also expects to add one or two new LPs to the fund. He said that there are no plans to hire more investing partners.
Woodside typically sticks to early stage information technology companies and semiconductor startups. The firm last took a company public in 2000, when e-business marketing company FirePond offered $110 million in new shares. The company delisted its shares in 2003.
More recently, BioNumerik Pharmaceuticals Inc., a cancer drug company based in San Antonio, Texas, withdrew its $86 million proposed IPO. The firm filed in mid-2004. This is the second time BioNumerik has withdrawn. The company, which has raised $125 million since 1995 from Woodside and other investors, previously filed and withdrew in 2001.
Woodside’s most recent announced investment was as part of a $10 million funding deal in communications equipment maker VeriWave in mid-2005.