Mohr Davidow continues cutback trend

The US-based firm has become the third venture capital firm to make a second cutback on earlier fundraising, cutting a further $200m from its seventh fund.

(PrivateEquityCentral.net) US-based Mohr Davidow Ventures has started 2003 in the same fashion it started 2002 – by returning a huge chunk of its most recent fund to its limited partners.

 

In January last year, Mohr Davidow became one of the first major venture capital firms to make a serious cut and return money to its investors when it cut its $843m Fund VII almost 25 per cent to $652m.

 

Now, the firm has cut the fund another $200m from Fund VII, reducing it to $450m. The firm is also closing its Seattle office. Mohr Davidow general partner Bill Ericson, who has been the firm’s managing director in Seattle since the office opened in April 2000, is moving to Menlo Park.

 

“We are not pulling out of the companies in Seattle,” Ericson said, according to the Seattle Times. “You will see us continue to come up here on a regular basis.”

 

The only other non-clerical staff at Mohr Davidow's Seattle office – venture partner Bill Gossman and entrepreneur-in-residence Rowan Chapman – will leave the firm when the office closes.

 

Mohr Davidow joins Atlas Venture and Redpoint Ventures in a small, but expanding circle, of venture capital firms to make double cutbacks in their capital under management.

 

Communications, information technology, and life sciences sectors venture capital specialist Atlas Venture announced last month it was closing its Seattle and Menlo Park offices and shaving another $250m off its most recent fund, Atlas Venture VI, shrinking it to $600m.

 

In June last year, Atlas announced it was releasing its limited partners from 12 per cent of their commitments to Atlas Venture VI, which closed on $967m in April 2001, effectively cutting its size by $115m.

 

Redpoint, which reduced the size of its $1.25bn Fund II by 25 per cent to $937.5m in March last year, last month told investors that it was slashing an additional $187.5m, making it one of the first firms to cut its fund twice.

 

Mohr Davidow’s latest giveback is in line with those undertaken by at least 15 major US venture capital firms during 2002. Earlier this month, Mobius Venture Capital reduced the size of its $1.5bn sixth fund by $250m, or approximately 17 per cent.