PhillyInc: PhillyInc: Radnor venture-cap firm to retire (successful) 1999 tech fund

Posted: March 28, 2013

Venture-capital funds do not last forever, and Cross Atlantic Capital Partners has said it would wind down a $120 million fund it started in 1999.

The Radnor firm, which has more than $500 million under management, said it would liquidate the tech fund's remaining portfolio holdings. Cross Atlantic said the decision came after several "successful exits, including three IPOs."

Those initial public offerings were Gain Capital Holdings Inc., of Bedminster, N.J.; Rubicon Technology Inc., of Bensenville, Ill.; and Vebnet Holdings P.L.C., of London.

Venture firms generally are not

eager to tout the beginning of the end for a fund. The typical life span of venture funds is 10 years, with several extensions generally needed to nudge the privately held companies in its portfolio out of the nest. So the Cross Atlantic Technology Fund L.P. is overdue for retirement.

However, Cross Atlantic Capital Partners is by far the largest shareholder in Rubicon Technology, a publicly traded maker of products used in LEDs and other optical equipment, owning 24 percent of the common stock.

Any change in Cross Atlantic's Rubicon holdings matters mightily to other shareholders of the tech company.

Over the next three months, Cross Atlantic expects to sell the 668,572 shares of Rubicon that it holds in its Cross Atlantic Technology Fund. Based on Tuesday's closing price of $6.51, those Rubicon shares would be worth about $4.4 million.

However, Cross Atlantic said that, while it intended to sell the technology fund's Rubicon holdings by June 30, it would continue to own 4,985,677 shares in Rubicon through two other funds, Cross Atlantic Technology Fund II L.P. and the Co-Investment 2000 Fund L.P. Those holdings would be worth $32.5 million, based on Tuesday's closing price.

So what kind of returns has the first technology fund generated for investors? Cross Atlantic didn't say, but one of its big limited partners has provided regular updates.

According to the latest budget report for the Pennsylvania Public School Employees' Retirement System (PSERS), the Cross Atlantic Technology Fund had drawn $30.4 million in capital from the public pension fund since its inception. As of Dec. 31, PSERS had received distributions totaling $33.7 million.

That doesn't sound like a resounding success for what is a high-risk, high-reward style of investing. But on the face of it, that return is better than the average posted by other funds started in 1999.

The median internal rate of return for all 1999 vintage funds was a negative 3.43 percent, according to an analysis done by Cambridge Associates for the National Venture Capital Association.


Contact Mike Armstrong

at 215-854-2980 or marmstrong@phillynews.com, or follow

on Twitter @PhillyInc. Read his blog, "PhillyInc," at www.phillyinc.biz.

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