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Anthem swims against VC tide November 25, 2002 Philadelphia Business Journal ROSEMONT —Anthem Capital Management sailed against the prevailing investment wind well enough to close on $33 million for its second venture fund in September. It now has $51 million in commitments for the fund and thinks it can stay the course long enough to get $75 million in commitments by year's end. "
We're continuing in a fund-raising mode for the foreseeable future," said Gerald A. Schaafsma, a general partner in the fund, which is called Anthem Capital II. Money managers raised $1.7 billion for 33 funds in the third quarter, according to Thomson Venture Economics and the National Venture Capital Association. That's down a little from $2.1 billion for 36 funds in the second quarter and compares to $7 billion for 69 funds in the third quarter of last year. All three sets of figures show that money raising for venture funds has slowed precipitously since 2000, when the tech and telecom bubbles were at their largest diameters. That year, money managers raised $97.2 billion for 632 funds. Two things have aided Anthem's fund-raising efforts. One is that the fund for which it is raising money is its second. Of the 33 funds raised in the third quarter, 27 were raised by firms that had raised venture funds before. So far this year, 47 of the 80 funds raised have been follow-on funds. Another is that Anthem Capital II was awarded Small Business Investment Co. status from the Small Business Administration. That means the SBA will contribute $2 to the fund for every $1 Anthem raises from other investors. So, to get Anthem Capital II to $100 million, Anthem only has to raise a third of that amount. (In exchange for its investment, the SBA is first in line for any profits the fund generates, although the maximum profit it can receive is capped according to a complex formula.) Anthem's first fund, which is $43 million and fully invested, is also an SBIC. Anthem launched that fund eight years ago from its Baltimore office. It hired Schaafsma and opened its office here about five-and-a-half years ago. " They were down in Baltimore and wanted to invest up here in the Philadelphia market, but really weren't doing a good job of sourcing opportunities and plugging into the network, so that was my job," Schaafsma said. As a result of his being hired, Schaafsma said, six of the 18 companies invested in through Anthem's first fund are from this area, with the rest being from Maryland, Washington and Virginia. Without him, Schaafsma thinks Anthem I would only have invested in two or three companies from this region. Anthem typically first invests in a company in its first institutional funding and then contributes to follow-on rounds as it sees fit. About 40 percent of its investments are in first rounds, 35 percent are in second rounds and 25 percent are in third rounds, Schaafsma said. Anthem's investments usually range from $1 million to $5 million. It invests in software, telecom, life-sciences and industrial-technology companies. © 2002 American City Business Journals Inc. |