Pequot spins out venture arm

Hedge fund Pequot Capital will fracture for a second time with the spin-off of its multibillion venture unit.

New York-based Pequot Ventures will spin out from parent hedge fund manager Pequot Capital to become FirstMark Capital.

Effective 30 June, FirstMark will assume the management operations of Pequot Ventures and full responsibility for its $2 billion (€ 1.3 billion) in assets under management.

Larry Lenihan

“Our venture business has been functioning as an autonomous entity for some time and this separation is the next logical step for both Pequot Capital and Pequot Ventures’ successful yet distinct businesses,” Pequot Ventures’ managing director, Larry Lenihan, said in a statement. “As a separate entity, we will be better positioned to pursue our investment agenda and develop new opportunities unique to our business.”

FirstMark is the second major spin-out from Pequot Capital. In 2001, former Pequot Capital president Daniel Benton split from chairman Arthur Samburg to form Andor Capital Management, taking $7.5 billion (€4.9 billion) of the firm’s assets with him. Pequot Capital retained the remaining $7.5 billion in assets including Pequot Ventures.

Following the spin-out of Pequot Ventures, Pequot Capital will have approximately $4.5 billion under management.
Pequot Ventures has an 11-year history and approximately $2 billion in committed capital. The firm invests in technology companies with a focus on New York City, often serving as the first institutional investor to provide financing.

In the last 18 months, the firm closed its seventh fund and completed eight exits and 12 investments. It most recently participated in a $12 million Series B fundraising round for governance solutions company Aveska.

FirstMark’s staff of 12 investment professionals will be headed by four managing directors who have worked together for seven years: Larry Lenihan, Jerry Poch, Amish Jani and Rick Heitzmann.

Venture partners Larry Wilson and Sterling Phillips, who joined in 2006 and 2007 respectively, will also add operational capabilities to the team.