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Newcomer Emergence Capital Closes $125M Debut Fund By Russ Garland of The Venture Capital Analyst 9/2/2004 Burlingame, Calif. -- In a year notable for the number of established venture firms raising fresh capital, newcomer Emergence Capital Partners has closed a debut fund at $125 million, exceeding its target. The Burlingame, Calif., firm boasts an experienced investment team of Jason Green, formerly of U.S. Venture Partners, and Brian Jacobs, who was with St. Paul Venture Capital. The two left their respective firms to found Emergence, joined by a third partner, Gordon Ritter, co-founder of Whistle Communications, which International Business Machines Corp. has acquired. Limited partners in Emergence Capital Partners I L.P. include California Public Employees' Retirement System, Fairview Capital Partners, Morgan Stanley Inc., University of Michigan and University of Minnesota. Emergence set out to raise the fund, with a target of $100 million, in the spring of 2003. "Our strategy was to get into the market at a time when we knew it was going to be very tough, but we knew that other firms weren't going to be out looking yet," said Jacobs. Calpers and Fairview were the first to sign on and "they played the role of helping to validate us," he said. Nonetheless, it took Emergence a year of fund-raising to reach a $70 million first close in April. The firm capped the fund at $125 million, although there was additional demand, according to Mr. Jacobs. Emergence surely was helped by the success of Salesforce.com, which went public in June. It is one of three companies the partners backed with their own money to vet their investment process. They bought $1 million in Salesforce stock from a former employee. Salesforce, which uses the Internet to provide businesses with software for managing customer relationships, is a model for the "technology-enabled services" that Emergence intends to specialize in. These are companies that integrate technology into products that can be delivered as a service to customers, said Mr. Jacobs. This contrasts to the old model, where start-ups sold the technology itself to users who then had to implement it. "I don't know of a lot of venture firms that have developed expertise in building service companies," Mr. Jacobs said. Emergence has made one investment from its new fund, in Visage Mobile, a San Francisco company that Mr. Jacobs co-founded while at St. Paul Venture Capital, an early investor. Emergence invested in an unannounced extension of the company's last round. Advanced Technology Ventures, Mobius Venture Capital and Selby Venture Partners are also investors. Visage Mobile sells technology that allows wireless carriers and consumer brands to provide services via branded mobile networks. Emergence looks to deploy the fund into 18 to 20 early-stage technology companies over the next four to five years, investing $7 million to $8 million in each start-up. Mr. Jacobs said the firm has no plans to expand beyond its current three partners, but will be adding support staff.
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