Twin Cities Equity Financing Firm Ready to Spend $10 Million
Says it won't be as involved in managing portfolio companies in future
by Dale Kurschner
Sherpa Partners LLC of Edina, Minn., will soon have more than $10 million in new funds available for venture investing in Minnesota-based technology companies -- and they'll have a new "hands-off" management style to go along with it.
The consulting/financing company is expected to close on the first stage of a $20 million to $40 million venture capital fund by the end of August. Commitments as of Aug. 3 exceeded $10 million. The proceeds will be invested solely in Minnesota information technology companies.
Investors are coming from within this region, as well as from the East and West coasts, says C. McKenzie Lewis III, one of the firm's partners. "We're seeing a lot of interest in Minnesota-based technology companies," he says.
Sherpa Partners decided to set up its own venture fund to make its life a little easier. "We've been investing in these companies anyhow with consortiums of angels and investors on a company-by-company basis," Lewis says. "That takes a lot of time and it's difficult for individual investors to evaluate an early stage company."
Two companies already have been identified as potential recipients of at least some of the first round's proceeds. Unlike previously, the financing will come with little management oversight from Sherpa.
Lewis' group has traditionally gotten very involved with management at the emerging technology companies they invest in. "Our model was to do more hands-on with management help," Lewis says. "We don't have the bandwidth for that, so now it's more that we make sure they have the capital they need and the management team to get the job done."
Sherpa's investment successes include early participation in Xiotech Corp., a Twin Cities-based storage area network producer that was purchased by Seagate Technology Inc.