Debacle or blessing in disguise? That’s what I’m trying to figure out about Panorama Capital’s decision to end its fundraising drive with just $240 million in committed capital. Leaning toward the latter, but remain open to persuasion.
Panorama is a Menlo Park-based venture capital shop that focuses on early and expansion-stage opportunities in both the IT and life sciences sectors. Its team previously handled venture capital for JPMorgan Partners, but went independent when that firm divided in 2005 (its buyout group is now CCMP Capital). Panorama began raising its first independent fund in October 2005, and told me that the minimum size would be $400 million. Further reporting by a colleague uncovered designs to secure up to $550 million.
Panorama initially received a cornerstone investment from JPMorgan, but struggled to secure additional commitments. “After 50 years of investing and 50 exits by IPO and M&A, we were considered a first-time fund,” explains Rod Ferguson, a Panorama managing director. “It put us at a definite disadvantage.”
Panorama last fall cut its fundraising target to $300 million, according to VentureWire. At around the same time, it lost longtime principals Vikram Gupta and John Ryan and associate Francis Ho.
Fast forward to today, and Panorama is done fundraising with $240 million. Ferguson says that it was just time to turn all of the firm’s attentions toward adding new portfolio companies (it already has six), and that the smaller size does not affect the firm’s investment strategy.
This is the “blessing in disguise” part. Ferguson didn’t say it, but a $240 million fund makes more sense than $550 million – given that Panorama has kept a core team of five managing directors. You could justify more given that Panorama sometimes gets involved in pricey pharma deals, but $50 million per partner is generally considered the smart going rate.
I’m sure that’s little consolation to the Panorama team in terms of saving face, but it may well pay off when it comes time to cut carry checks.