Braemar closes Fund III on $300m target

The energy-focused venture firm received commitments from a large number of new and existing LPs and will follow a ‘niche focus on the energy technology space’, according to the firm.

Braemar Energy Ventures has held a final close for its third fund on its $300 million target.

The New York and Boston-based firm has been in market with Fund III since last year and had attracted about $280 million from 29 investors as of 4 May. The fund will follow a “niche focus on the energy technology space…not to be confused with ‘clean tech’”, according to a spokesperson for the firm. Target companies will operate in a variety of segments of the energy industry, including conventional oil, gas, coal as well as renewable power and fuels.

“Energy efficiency continues to be a major theme in the new fund with technology ranging from utility-scale solutions down to managing power and fuel consumption at the device level,” Braemar managing partner Dennis Costello said in a statement.

The firm was unavailable for further comment at press time.

Existing investors in Braemar’s previous fund that re-upped to Fund III include AlpInvest Partners, Morgan Stanley Alternative Investments and the Government of Singapore Investment Corporation. Braemar also attracted commitments from a number of new LPs, such as the Rhode Island State Treasury, Rothschild Investment Trust and Invesco, on behalf of the California State Teachers’ Retirement System.

Braemar’s second fund collected $250 million in October 2007, more than four times the $56 million raised for its debut fund in 2003.

The firm invests in both venture and expansion stage companies, and has an investment horizon of between three and seven years.

Other venture firms in market with funds include Tenaya Capital, which is targeting $300 million for its sixth fund, and Institutional Venture Partners, which is raising its 14th fund targeting $750 million.

While venture capital has in recent years been considered to be the “least loved” of the asset classes by certain investors, in part due to the fact that 10-year venture returns turned negative in 2010 for the first time, venture capital outperformed private equity in 2011, returning 13.9 percent compared to 10.9 percent for private equity, according to Cambridge’s private equity and venture capital index.

However, private equity continues to outperform venture in the three-year, five-year, and 10-year investment periods.

Braemar Energy Ventures typically invests between $5 million and $25 million per transaction. The firm’s principals have invested in more than 100 companies, including energy storage company PowerGenix, Bioengineering technology business Verenium and solar energy company Stion.