Tudor Ventures today announced that it has closed its third fund with $262 million, as first reported last month by my colleagues over at PE Week. So we’ve got 5 Questions for Bob Forlenza, founding parter of Tudor Ventures:
1. Where exactly does Tudor Ventures fit within the Tudor universe? You obviously have the hedge fund activities t6hat sometimes dip down for venture deals like Amp’d Mobile, and also the new early-stage fund being managed by Dave Andonian.
Forlenza: We’re the late-stage venture capital arm of Tudor Investment. We’re focused on investments in companies that have established products in market, which typically have revenues of between $10 million and $50 million. We also will selectively invest in companies that are larger than that. As you said, Dave Andonian’s focus is at a much earlier stage. But I should clarify that Dave is not a part of Tudor — Tudor is an investor in his fund, Dace Ventures.
2. Does all of your fund capital come from Tudor?
Forlenza: No, Tudor is one of many limited partners. We have a number of institutional investors, which range from state pension funds to college endowments. We also have funds-of-funds, and other investment vehicles.
3. Your last fund was $410 million…
Forlenza: Yes, but we reduced it to $325 million, when the market was in really bad shape…
3a. Ok, but this new fund is still smaller than even the reduced size. Why raise less this time around?
Forlenza: We think the best place for us to optimize return on capital is in deals where we can be the lead investor with a maximum investment of between $10 million and $20 million. There used to be lots of successful firms who did that, but most of them have become too large to invest in smaller deals. So we sought to raise an amount that keeps us in that spot, where we can take advantage of the supply/demand imbalance among late-stage companies that are taking longer to liquidity.
4. Almost half of your portfolio companies are on the West Coast. Have you considered opening a satellite office?
Forlenza: One of the things we think we do very well is leverage the resources of Tudor Investment Corp. – both the public equity investors and analysts we have both here and elsewhere. We have discussed opening a West Coast office, but it’s nothing that we’re planning to do ribht now.
5. Let’s do a hypothetical pitch. A prospective portfolio company has to choose between Tudor Ventures and another VC firm, with identical term sheets. What is your edge?
Forlenza: Because of our relationship with Tudor Investment Corp., we have an extensive network of contacts that can add value – particularly when it comes to public market positioning Tudor is a substantial company with executives who not only have contacts throughout the financial services industry, but throughout the entire U.S. economy… And I think we have a team within Tudor Ventures that has extensive experience investing in expansion rounds, which requires you to know how to transition from an entrepreneur-driven company.