The Los Angeles-based firm has not closed any commitments for its third fund, Zone Ventures III, but it expects to hold its first close in the next six months, says Creer.
“We’re having good follow-on meetings with a handful of large institutions,” he says.
The firm raised $100 million in 1999 as part of the
Zone might have had trouble fund-raising during normal times, but it is finding it doubly hard in the poor economic environment. “I raised my last fund with [Tim] Draper and I don’t think I really honed in on the fund-raising skills I need for this type of market,” says Creer.
The firm did not have a solid base of existing investors to return to either. Says Creer: “It’s all about LP relationships right now. Either you have people who follow you or you don’t. I didn’t. I had a lot of people who came in during the boom and didn’t have the stomach for it. There’s a lot of people who like venture during the boom, when it’s doing well and don’t like it when it’s not.”
Still, Creer is optimistic that another major exit will buoy Zone’s rebooted fund-raising efforts. He specifically mentioned two portfolio companies as most promising:
“Both are really making headway,” Creer says. “I’m hoping to get one of those out the door in the next little bit, which should give us a boost on the fund-raising side.”
Zone is not currently making new investments from its previous fund, but continues to support and invest in its portfolio companies, Creer says.
Zone has had one IPO to date: DivX (Nasdaq: DIVX). The company offered at $16 per share on Sept. 22, 2006 and quickly rose to nearly $30 a share at the same time Zone launched its fundraising efforts. The stock now trades just above $5 per share.
DivX raised $47 million from its venture investors, starting in 2000, and now has a market capitalization of $970 million. Zone participated in the first three rounds along with
DivX is Zone’s only major hit. The firm has seen four of its portfolio companies get acquired since it was founded in 1998. It sold facial recognition startup