Key Venture Partners is losing one of its three managing directors, as David Dame is leaving to become an operating partner at a middle-market buyout firm to be named later. If I knew his destination, it would be a middle-market buyout firm to be named now.
The big question, of course, is what this means for KVP. The Waltham, Mass.-based firm has gradually transformed itself from a Series B/C investors, to one focused on growth financings for companies with between $5 million and $25 million in revenue ($5m-$10m checks). Not a bad risk/reward strategy – I’d rather go early or late than sit in the middle – but Dame’s departure does put the firm in a bit of a pickle.
First, its remaining two partners – Ted Mocarski and John Ward — both focus on communication and data services companies, whereas Dame had done enterprise software. That means KVP either needs to rebrand itself around a narrower industry focus, or hire a new enterprise IT guy (or perhaps a healthcare tech guy, etc.). The problem with the last part is that KVP hasn’t raised a new fund in a while, and doesn’t have any plans to do so in the near future. There had been talk last year that it would raise more money via a stapled secondary with sole limited partner Key Corp. selling off some of its interests, but the deal fell through when Key Corp. got cold feet. And since there’s still a bunch of dry powder lying around, it could be tough to recruit a newbie.
On the upside, KVP is about to score a big exit with the pending sale of Optasite, and has nothing but well wishes for Dame. Plus, Key had pledged to anchor the next fund (whenever it comes), which should provide an additional level of comfort while managing the existing portfolio and making new deals. So it’s a big loss, but not a fatal one.