Moving Around

Two unrelated - and heretofore unreported - personnel notes to share with you this morning:

Tony Abate has stepped down from his general partner role with Ironside Ventures, a Cambridge, Mass.-based firm whose third fund-raising effort is presently in limbo. Word of his possible departure has been circulating through Boston cocktail conversations since early February, although the final decision came quite recently. Why the buzz? First, Abate is one of the folks who left Battery Ventures as part of that firm's 2002-2003 downsizing, and local VCs and LPs have maintained an unusually high level of interest in the ex-Battery partners' fates (i.e., Todd Dagres and the phantom fund with CRV's Santo Politi).

Second, there is a bit of concern that a number of Boston-area firms have struggled to raise their second and third funds, as evidenced by the recent demise of YankeeTek Ventures. Ironside originally launched Fund III with a $150 million target in early 2004, as its first real foray into the outside institutional market (Ironside was founded in 1998 as an affiliate of Canadian insurer Manulife Financial, and then spun out in 2000 with a $25 million fund backed by rich folks, friends and family). Bill Sheahan, a general partner with Ironside, acknowledges that the firm was unable to hit its target, although he adds that it did secure several significant commitments. Rather than taking a reduced amount, however, Ironside has temporarily tabled the fund-raising process. Part of that decision is due to Abate's departure, since new documents would have to be drawn up, and every prospective LP would have a new set of questions.

Another, perhaps larger, part is that Ironside is looking at a bunch of strategic options that Sheahan wouldn't specify, except to call them "very interesting." I've got a couple of guesses, but will reserve those until something formal takes shape in the next 30 to 60 days.

** Switching coasts is a strange saga at Pacific Corporate Group, a La Jolla, Calif.-based advisory that does non-discretionary private equity consulting for such clients as The State of Washington, The State of Oregon and the Ohio Public Employees Retirement System. The firm has a history of some major personnel juggling (it even made an LP "watch list" several years ago, from which it since has been removed), including the recent departure of firm president Scott Tuck after less than two years on the job. Moreover, Craig White left just three months after joining from Callan Associates, and since has turned up at a Sacramento advisory called LP Capital Advisors (he declined to comment about his brief PCG experience).

Anyway, PCG has generally managed to survive such turmoil thanks to its retention of a couple key professionals (Tara Blackburn, most notably). And it will continue to survive, although the potential departure of Scott Vollmer makes things a bit more difficult.

Vollmer currently runs a special-situations fund-of-funds for PCG, which counts the State of Florida as its largest limited partner ($150 million commitment). Interestingly, Florida was advised to commit to the fund by the aforementioned Craig White (while he was still with Callan), but that's neither here nor there. The bigger issue is that Vollmer is a key man on the fund, and has told PCG that he no longer wants to be part of the organization.

The following is from a confidential settlement communication from Vollmer's lawyers to PCG's lawyers, dated March 9: "You [PCG] have directly stated that your goal is to achieve an outcome in which Scott stays with PCG. That is not possible in my opinion. there are very substantial disagreements over what actually happened in the past. Further, Scott is unwilling to continue to be pressured to invest the Fund's money in obviously inappropriate investments, both because of his obligation to have 'freedom of judgment' in selecting investments and because of the failure to disclose to the client that PCG is benefiting in some material way from some undisclosed material way from the placement." It goes on to propose a solution whereby Vollmer would continue to manage the fund, but that all related revenue and profits would be shared by both Vollmer and PCG.

I called Vollmer at his Connecticut home to discuss the matter, but he didn't return my message. His attorney also declined to comment.

Chris Bower, founder and CEO of PCG, said that Vollmer is still a current employee of PCG, and that he expects that to be the case going forward. He suggested that my info is outdated (remember, the letter is from March 9), which might mean that some sort of settlement has, indeed, been reached. On the other hand, such a settlement could be easily confirmed if PCG simply asked Scott to say that he's a current and future employee. That has not happened, and it doesn't sound like it will. An interesting situation worth following (more details in Monday's PE Week print edition), particularly considering the $150 million that Florida could pull if the key-man provision is triggered (which Bower says has not happened). Florida officials declined to comment on the matter.