Random Ramblings

Split Rock Partners this morning announced that it has raised $300 million for its second fund, which will continue to focus on early-stage IR and medical device opportunities in the Midwest and on the West Coast. It was by all accounts a successful fundraise, with all of its first fund LPs returning. That includes insurer St. Paul Cos., which used to hold Split Rock as a captive fund named St. Paul Venture Capital.

Actually, that’s not the complete story. St. Paul VC was actually spun out into a pair of independent firms in 2004. Split Rock was one, and the other was called Vesbridge Partners. The new firms were differentiated in two ways. The first was geographical. Both firms had offices in Minneapolis, but Split Rock’s satellite was in Menlo Park, while Vesbridge’s was in (my hometown of) Westborough, Mass. That basically meant that Split Rock would invest middle-west, while Vesbridge would invest nationwide with a ground presence on the East Coast. The other difference was in terms of investment sectors. Split Rock wanted to focus on both IT and healthcare, while Vesbridge was dedicated to tech opportunities like early-stage networking and Internet infrastructure.

It was all amicable, with Vesbridge even sending its former colleagues a previously-commissioned portrait of the Split Rock Lighthouse on Lake Superior. All well and good, except for one big problem: Vesbridge couldn’t raise its fund.

While Split Rock breezed to $275 million for its debut vehicle, Vesbridge struggled. It had received a $50 million cornerstone commitment from St. Paul Cos., but gained little traction toward its $250 million target. One early problem was that managing director Bill Cadogan (former CEO of ADC Telecom) soon agreed to become chairman and interim CEO of Mahi Networks. That company would fail, but he didn’t end up returning fulltime to Vesbridge. Moreover, fellow managing director Rick Boswell announced his plans to scale back his activities in preparation for retirement. LPs began balking, and it can sometimes be very hard to get them back.

Vesbridge eventually closed the fund out with just around $60 million, including the St. Paul money and a bit of endowment capital. It’s done a bunch of deals (and even has three sales), but still seems to be struggling. The latest problem is the pending departure of principal Danny Klein, who will join Hunt Ventures in Dallas next month. That leaves Vesbridge without any full-timers investors on the East Coast (office now in Wakefield, MA), and only two full-timers in general (senior MDs Zenas Hutchinson and Jeff Hinck). Whole thing is kind of sad, as I like both Hutchinson and Hinck (even though I’ve been unable to reach them for this story).

Never say never about resuscitation of a VC firm, and that goes double for a firm like Vesbridge without any portfolio blow-up baggage. It might even have some brandnew LP commitments lined up. But, until I hear otherwise, Vesbridge sadly lands on my unofficial list of the walking dead…

* Another trade pub this morning is reporting that mid-market lender Golub Capital has “revived plans to take itself public,” after having withdrawn an IPO filing last October due to unfavorable market conditions.

The story doesn’t have any sourcing, although methinks the info came from a limited partner (Golub is currently raising its sixth fund). So I emailed firm president Lawrence Golub for comment. This is what came back:

"Business at Golub Capital is great. We had a record first quarter and are now one of the top five middle market senior lenders. But the rumors of a resurrection of our IPO are greatly exaggerated. Actually, just plain false. Last year we withdrew the registration statement that would have taken public a majority of the assets of our investment funds. Since that time we have made taken no steps to restart the registration and have no plans to restart the registration. It is certainly possible that at some future time when market conditions are strong, we might reconsider. But sadly for our lawyers, accountants and printers, that time is certainly not now or soon. "

* LinkedIn is closing in on a new financing round with a valuation of around $1 billion, according to multiple reports. There also has been some speculation that the $1 billion figure may actually be an acquisition price, but I’m not so sure that LinkedIn is actually on the auction block. I spoke to a source within an “usual suspect” acquirer yesterday, who said that he has yet to either see a pitch book or receive an informal inquiry of interest. While we wait for details, I’ve got some LinkedIn Love going on.

* It sure didn’t take venture capitalist Rob Theis much time to find a new job. Details here.

* Note: I used a poor choice of words yesterday in my "Help Wanted" ad, when I said that the position would be a "permanent sub" for the PE Week Wire. What I meant was permanent pinch-hitter, for when I'm out. Not a replacement. Apologies for the confusion.

* peHUB First Read, including how attacking Wall Street must not have helped much in North Carolina. Plus, the Sprint/Clearwire WiMax deal.