A Tale of Two Firms

There has been endless discussion over the past few years about how much capital is flowing into the private equity markets – whether it be for mega-LBO funds or VC vehicles focused on hot niches like cleantech or China. Too much money chasing too few deals… fund size tail wagging the due diligence dog… yada yada. But rarely mentioned in these pieces is one inescapable fact: For most firms, fundraising is extremely difficult work. So difficult, in fact, that quitting is sometimes the only reasonable option. 

This brings us to the latest edition of our Dickensian riff, which involves Trimaran Capital Partners and TianDi Growth Capital. The former is a New York-based middle-market buyout shop, while the latter is a VC shop focused on tech-transfer opportunities for cleantech companies in China. Neither was able to raise its latest fund via traditional means, but only Trimaran is fading away. TianDi is just getting started…

Trimaran: As many of you guessed, Trimaran was the answer to yesterday’s PE Week Wire Quiz Question about the middle-market buyout shop that last week suffered multiple senior defections. Those who guessed wrong were probably thrown off by my hint – “It’s been trying to raise its third fund for a (very) long time” – because it was factually incorrect (apologies).

Trimaran had begun raising its third fund in 2005 with a $1.25 billion target and Credit Suisse as its placement agent, but was unable to get traction for two basic reasons. First, generalist middle-market firms aren’t exactly in favor nowadays among LPs, unless they have spectacular returns or some other distinguishing characteristic. Second, and more importantly, it began fund-raising a bit too early because it had a bunch of realizations on tap for 2006. Had Trimaran begun fundraising 12 months later, it may still be alive and kicking (rather than operating in its current state as a legacy portfolio manager).

As for the departures, they are managing director Steve Flyer (in-house counsel), director Dan Benyaminy, associate Dan Gaspar and associate Greg Prata. The quartet left en masse last week to go work for Columbus Nova, a firm with offices in both the U.S. and Russia. No real surprise – save for the fact that four people left together – since Trimaran has made it clear that it will not raise another fund. It’s unclear what this means for other staffers, but it wouldn’t be surprising to see additional defections and/or new non-Trimaran investment efforts from senior pros.

TianDi: I first wrote about this firm 14 months ago when it was tentatively called Shanghai Ventures. Here’s a refresher or, for expediency, it was a China-focused private equity firm launched by Ollie Curme, a general partner with Battery Ventures for more than 20 years. At the time, Shanghai Ventures was designed to invest between $10 million and $50 million in revenue-generating companies within such sectors as industrial manufacturing, medical devices, logistics and energy. I other words, take advantage of a market opening not being filled by the early-stage VCs that were flooding the market.

But, as with Trimaran, TianDi was unable to grab limited partner traction. Blame the general difficulties of emerging managers, the lack of a branded sponsor (even though Battery was at least tangentially involved) or the fact that Curme was targeting a sector that was relatively new to him (even though he did have native Chinese partners). So formal fund-raising stopped.

Unlike Trimaran, however, Curme didn’t give up. Instead, he and his two other partners reached into their own pockets to raise TianDi’s inaugural fund. They also changed investment strategies. A press release is slated for later this week, but Curme told me yesterday that the inaugural TianDi fund is now capped at $40 million and is open for business. The new focus is on Chinese alt energy and enviro tech companies that need help with tech transfer from Europe or North America.

For example, it’s working with a Chinese wind farm developer that to make its own wind turbines with the latest technologies. So TianDi will make an equity investment, and also is talking with European vendors to license their technology for manufacturing purposes. Average deals will be $5 million, which means TianDi shouldn’t need to raise additional capital for the next 18 to 24 months.

Curme’s two other senior partners are Enqiang Wang, who previously was a partner with Shanghai Venture Partners, and Michael Yahng, who is a former interim CEO of Shenzen Development Bank. The TianDi website is here.