Some folks believe that when the Internet bubble burst, the resulting splatter extinguished venture capitalists' fire in the belly. Len Batterson isn't one of those folks. The head of Batterson Venture Partners in Chicago plans to raise a $400 million private equity fund focused on institutional investors, with 75% of investment dedicated to high-tech companies. Batterson wants to make about 30 to 35 investments during the life of the fund and has already recruited an impressive roster of backers. Notables include James Kimsey, AOL founder; Casey Cowell, former U.S. Robotics chairman; John Walter, former head of AT&T; and Alan Schriesheim, former head of Argonne National Laboratory.
It's a fairly ambitious goal within a regional context. During the first three quarters of 2001, Illinois venture-capital funds raised $797 million, with the average fund size weighing in at $72.5 million, according to the National Venture Capital Association. Nationwide, venture-capital funds are a shadow of their year-2000 selves. The association estimates the 2001 total will be between $38 billion and $42 billion, compared with last year's $107 billion. But 2001 isn't quite so dismal when viewed from another perspective: The venture-capital investment total this year will rank as the third best year in the industry's history, according to the association.
"Four hundred million dollars is a good-sized fund for today's environment," says Jeanne Metzger, the association's VP of business development. "But it doesn't mean he can't do it. VCs venture capitalists with experience are still able to raise money." Other venture-capital watchers agree. "It sounds ambitious given the recent history we've just been through, but I don't think it will be ambitious in the next two or three years," says Bill Hutchison, Andersen's global director of consulting for the technology industry. Moore's Law will continue to double performance levels, with "boom times" in 2003 or 2004 driven by the next generation of products and services, according to Hutchison. "It's aggressive, but I think it's a good bet."
Batterson believes he has set a very attainable goal. Batterson Venture Partners has had about 40 meetings with potential investors during the past couple months, with encouraging results. Says Batterson, "The good news is, there's a lot of dough out there."