Tenaya in post-Lehman fundraise

Tenaya Capital spun out of Lehman Brothers in 2009 with the help of HarbourVest Partners. The firm is targeting $300m for its first fund after the spin-out.

Tenaya Capital, which spun out of Lehman Brothers’ venture capital business in 2009 with the backing of HarbourVest Partners, is raising its first fund as an independent firm.

Tenaya, headed by Tom Banahan, is targeting $300 million with a hard-cap of $400 million, according to documents from the New Jersey Division of Investment, which oversees the state's $70 billion pension system. New Jersey committed $40 million to the firm.

Tenaya declined to comment. Lazard is working as placement agent for the fundraising.

The firm, with offices in San Francisco and Boston, targets equity investments from $5 million to $10 million with follow-on financings bringing the total to $10 million to $15 million per company. Tenaya wants to invest in about 30 companies and has historically focused on software, internet, communications, IT infrastructure, electronics and other emerging technology sectors, according to New Jersey pension documents.

Tenaya is charging a 2 percent management fee during the five-year investment period based on capital commitments. The firm will use 100 percent of transaction fees to offset the management fee.

Lehman’s venture business was established in 1995 and invested in more than 95 portfolio companies. The bank’s venture arm raised a total of $1.1 billion and invested $717 million during its life.

Lehman filed for bankruptcy in September 2008 and began slowly spinning off its various private equity businesses. As part of the venture team deal, HarbourVest bought out a portion of Lehman’s LP interests in Lehman Brothers Venture Partners III, IV and V.

“This transaction [ensures] that we retain the same management team that has built this business over the last decade,” Banahan told Private Equity International at the time. He said the group had a strong relationship with LPs in the funds, based on a philosophy of “like, trust and respect”.

“Fortunately for us, the LPs were thrilled to stay with us,” he said.