Intersouth Closes on a Record- and Oversubscribed - $275 Million for Its Newest Venture Fund
Posted May 25, 2006
DURHAM, N.C. — Intersouth Partners
has closed on a new fund, the biggest in the venture capital fund's 21-year history.
Existing Intersouth investors and "a couple of new ones" poured $275 million into Intersouth's seventh fund. It was oversubscribed, the firm having set out to raise $250 million, Intersouth spokesperson Suzanne Cantando told WRAL Local Tech Wire.
The previous record raised by Intersouth was the $205 million sixth fund, which closed in 2003.
Intersouth, which was formed in 1985, now has $775 million under management. It is the largest early-stage VC firm in the Southeast. "We were able to raise this in about three months," Cantando said. "The environment is a little bit mixed right now. Some people are not as fortunate as we were in being able to raise the fund so quickly."
Jeff Barber of PricewaterhouseCoopers in Raleigh, who closely tracks the venture market, was impressed by both the size of Intersouth's fund and the speed with which the fund was raised.
"Isn't that something," Barber said, noting that the fund is the largest to be raised by a North Carolina-based firm. "That's a sizable fund even by California standards, by national standards."
Barber pointed out that "there is plenty of money in the system" and firms are raising large amounts of money nationally. However, investors are careful, so many having been burned by the "dot com" and telecom bust of 2000-1.
"This shows what a great track record they have at Intersouth," Barber said. "The fact they raised this money shows the great results they have provided for their investors in order to get that kind of response. I think it's an incredibly short period of time."
Cantando concurred that the key to the rapid raising and closing of the fund at an oversubscribed amount was enthusiasm from Intersouth's network of previous backers. "We were fortunate to have so much demand from existing investors," she said. However, Cantando said "a couple" of new investors were included.
Based on research done by the firm, Cantando said Intersouth planned to raise $250 million. However, investor interest helped push the amount higher. The decision was made to cap the fund at $275 million.
"We decided what was the right amount of the money (to manage) for the team than we have to plan," she said. Other factors included demands for funds in the region.
Intersouth focuses on early stage investments primarily in the Southeast.
The 2003 fund was invested in 18 companies. Intersouth has some 80 firms in its portfolio.
"We are pleased that our investors continue to believe in Intersouth's investment strategy, in our experienced team and in the promise of entrepreneurship throughout the Southeast, from the Baltimore-Washington corridor into the Research Triangle region, Atlanta and Florida," said Mitch Mumma, a managing general partner of Intersouth Partners. "It's a great time for early-stage investing and we are eager to deploy this capital to fuel entrepreneurial ideas."