FundsNews -Brand Equity Raising Second Fund

Having committed approximately 85% of its $95 million first fund, Brand Equity Ventures of Greenwich, Conn. is in the early stages of raising its second fund, targeted at $200 million..

General Partner Chris Kirchen said Brand Equity Ventures II will hold a first close in October or November, with a final close planned for early next year. Brand Equity II will largely mirror the firm’s first fund, focusing exclusively on high-growth consumer businesses. The firm’s average investment size will continue to total approximately $10 million throughout the life of each portfolio company.

Brand Equity I, which closed in March 1997, has invested in two companies, Alloy Online and Outpost.com, that are now publicly traded. Another portfolio company, fast food restaurant Ranch 1 recently filed for a public offering.

“The heart of what we do is early-stage investing in companies that are already up and running,” Kirchen said. “We generally invest in syndicates, and in very few cases do we control our portfolio companies.”

Kirchen said the firm’s limited partners have been approached about investing in the new fund. Once incumbent interest is gauged, he said Brand Equity will recruit traditional corporate and institutional venture partners.

To handle the accelerated deal flow of a larger fund, Brand Equity promoted vice presidents Bill Meurer and Marc Singer to general partners.

While Brand Equity I had a mild regional focus, Kirchner said the second fund will make between 80% and 90% of its investments in companies located between Boston and Washington D.C.

“We used to say we would look at any company within a non-stop flight of New York City,” he said. “But deal flow has exploded so much in the region, that now we say non-stop drive.”

He added that competition among venture firms in the Northeast has not kept up with the rate of deal flow.

Terms for Brand Equity II will match its predecessor, with a 80%/20% carried interest split and 2.5% management fee.