A Leaner Look for Atlas Venture

peHUB has learned that Atlas Venture is in the midst of some personnel “restructuring,” after closing its eighth fund well below target. Leaving will be Boston-based IT partner Ahmet Ozalp and London-based IT partner Martin Gibson, while Boston-based IT partners Eric Hjerpe and Barry Fidelman are transitioning into venture partner roles. The firm also is promoting life sciences pros Bruce Booth to partner, while chief operating officer Jeanne Henry has retired.

All of this is occurring after Atlas quietly closed Fund VIII with $283 million in capital commitments. Its original PPM had a $500 million cover, but within weeks Atlas had recalibrated the target to $400 million. In the end, though, it couldn’t get close to its target, or the $385 million it had raised for Fund VII back in 2006.

I spoke last night with Atlas partner Jeff Fagnan, who said that the firm opted against continuing fund-raising into Q1 (it closed last quarter), because most of the air had been sucked out of the LP market. “I know the number isn’t what we originally wanted, but I’m really proud that we closed a VC fund in this environment,” he said. Fagnan also acknowledged that the Atlas partnership is particularly large – 10 active partners – but that such a strategy works for the firm’s seed/early-stage strategy.

Kind of surprising that Atlas came in low, given that its seventh fund is considered far stronger than its earlier ones. An LP who did not invest, said that Fund VII was top-quartile, whereas Atlas’ previous four efforts had ranked third-quartile.

Atlas’ recent investment in CloudSwitch was its first investment out of Fund VIII. The firm opted to keep extra dry powder available in the predecessor fund, given the macro dearth of exit opportunities.

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  • The restructuring isn’t surprising as it’s probably been a long time coming. What is surprising is who is leaving. Eric Hjerpe is a quality guy, as is Barry Fidelman. If I were an LP, I would’ve picked some of the guys staying to go instead of those two individuals. It seems like Atlas is doubling down on its life sciences investments and moving away from IT.

  • Atlas is an interesting test case for other firms who have expanded internationally. Does that strategy work? Does the added coverage more than make up for the overhead/communications costs. Sounds like in Atlas’s case, many LPs have voted “no.”

    Do LPs want a global fund, or would they rather cherry pick and have “best of breed” in each geography. It reminds me of the old RJR Nabisco debate: why keep food and tobacco in one company, when there isn’t much synergy between the two, particulary when it’s easy for investors to diversify themselves?

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