US > Investment fund formation and management > Venture capital funds: National
Index of tables
Venture capital funds
Leading lawyers
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- Jonathan Axelrad, Goodwin Procter LLP ‘He is an incredible lawyer, is very knowledgeable and has very good negotiation skills with LPs’
- Thomas Beaudoin, WilmerHale ‘Commercial and responsive’
- Craig Dauchy, Cooley Godward Kronish LLP ‘The top guy for venture fund formation’
- Steven Franklin, Gunderson Dettmer LLP ‘Laid-back, easy to work with and really good - he provides top quality work and is able to defend his positions well’
- Robin Painter, Proskauer Rose LLP ‘Good all-round skills and commercial sense’
- Louis Singer, Morgan Lewis ‘Strong practice across fund types’
The prospects for venture capital fund formation in the immediate future do not look particularly rosy. Most institutional investors are currently closed to the asset class, with big pension and endowment funds declaring themselves over-allocated to alternative investments as a function of the general devaluation of their portfolios. There is some concern whether the Hedge Fund Transparency Act 2009 will also catch venture capital funds, thereby imposing a new layer of regulation on a mode of investment that has best flourished in a largely unregulated environment. However, despite the likely lack of new funds being formed, venture fund formation lawyers predict a steady diet of work relating to secondary or ‘annex’ funds, where old funds are reopened in order to fund or secure financing for struggling current portfolio companies. The lawyers interviewed also speculated whether there might be a swing in terms from the definite supremacy of the general partner (GP) towards the limited partner (LP). Some lawyers predicted that this would occur, citing the increasing crossover between private equity and venture capital investment and the likelihood of a tightening of terms filtering from the former. Others noted that in the venture world even the largest post-bubble-burst funds could be oversubscribed, leaving the balance of power with the GPs. Whichever is the case, it is likely that fund formation lawyers will be engaged to look at the contracts involved.
The internationalization of funds is a definite trend, with lawyers noting that around half of the new funds being raised having an international focus. China is particularly active, but India, Israel, Brazil and Russia all appear to be of interest.
In any event, even in a downturn, venture fund formation lawyers are a somewhat scarce resource. A significant change in the legal landscape in 2008 resulted from Wilson Sonsini Goodrich & Rosati’s fund formation team moving en masse to Goodwin Procter LLP in late 2007. Those firms that do are those with the most prominent reputations and significant experience, particularly for the more sought-after GP sponsor-side representations. In this specialist field, clients seek specialist lawyers - these rankings endeavor to identify them.
PRACTICE: Cooley Godward Kronish LLP is widely regarded as a ‘top-tier, standard-setting’ firm for venture capital fund formation and services. Clients are particularly enthused about the depth of the offering, noting that the venture fund team is ‘superb across offices, from San Francisco Bay to Silicon Valley to Colorado’. The practice is comprised of 40 lawyers who devote significant time to the field, and is spread throughout the firm’s US offices apart from Seattle. The practice is extremely well established, with experience dating back to 1959 and the formation of Draper, Gaither and Anderson, the first institutional venture capital limited partnership in the US. From these origins Cooley Godward Kronish LLP has built an undoubtedly impressive client base, with over 200 regular venture firm clients and between 50 and 70 funds instructing the practice every year. In 2007, Cooley Godward Kronish LLP represented 74 GPs and 35 LPs in private equity and venture fund formations. Clients say that the lawyers are ‘capable and responsive’ and ‘at the forefront of their field’.
Much of the practice’s work is confidential, though in 2008 it formed an $800m venture fund focused on information technology (IT), as well as three China-focused venture funds and three venture funds focused on investments in India. The team’s capabilities run from funds with the earliest stage focus to late-stage and public funds, and cover the full range of technology focuses including life sciences, IT and cleantech.
Clients say that the ‘contract work and assistance with fundraising is absolutely outstanding’ and note that ‘ Cooley Godward Kronish LLP ’s advice and contacts are incredibly valuable’.
CLIENTS: The practice’s outstanding venture fund client roster includes Alta Partners, Enterprise Partners, Institutional Venture Partners, Francisco Partners, Menlo Ventures, MPM Bioventures, Norwest Venture Partners, Prospect Venture Partners, Redpoint Ventures, Sigma Partners and Venrock Associates.
INDIVIDUALS: Practice group leader Craig Dauchy, who works out of the firm’s Palo Alto office, is described by clients as ‘the top guy for venture fund formation’. Reston, Virginia partner Michael Lincoln is singled out as ‘probably the best-connected lawyer in Virginia in terms of fund-raising... particularly in the technology field’.
PRACTICE: In October 2007, Goodwin Procter LLP hired renowned venture capital and private equity fund formation specialists Jonathan Axelrad, Robert Fore and Gerald Chacon from Wilson Sonsini Goodrich & Rosati. Their move, accompanied by a strong team of associates, transformed the legal market in this sector and in 2008 confirmed Goodwin Procter LLP as one of the leading firms for venture fund formation.
Goodwin Procter LLP’s venture fund formation practice is comprised of four Silicon Valley partners dedicated primarily to venture funds, as well as a wide group of associates and partners with ancillary practices. One of the firm’s distinguishing features is that it now has considerable expertise in every area of private investment. With this wedded to an integrated national platform of offices in Boston, Los Angeles, New York, San Diego, San Francisco, Silicon Valley and Washington DC, the firm has a compelling fund formation offering. Also noted is new partner Brian McDaniel, resident in the firm’s Hong Kong office, who clients recommend particularly for his ‘great expertise with India funds’. Clients rate the service as ‘excellent’ and praise the lawyers’ ‘great ability to think through complex issues’.
In 2008, the practice acted for top-tier venture firm Sequoia Capital in substantially all aspects of the fund formation process of Sequoia Capital India Growth Fund II and Sequoia Capital US Growth Fund IV. Goodwin Procter LLP also worked on the rapid raise of the $165m Saints Everest fund, a significant deal in the medical device arena. Another highlight was working on T Capital China Growth Fund, involving a $350m offering for one of the most highly regarded China-focused venture firms and among the first to use a domestic subsidiary RMB fund for making investments in China.
CLIENTS: Clients include Sequoia Capital, Mayfield Fund, VantagePoint Venture Partners, Merus Capital, Rho Ventures, CenterPoint Ventures, Pinnacle Ventures, Saints Capital, NGN Capital and Giza Venture Capital.
INDIVIDUALS: Silicon Valley-based co-head of the firm’s venture fund practice, Jonathan Axelrad, is particularly highlighted by clients. Clients say that ‘he is an incredible lawyer, is very knowledgeable and has very good negotiation skills with LPs’.
PRACTICE: Gunderson Dettmer LLP’s venture fund formation practice comprises around 25 lawyers with a significant focus on the area, of whom seven are partners. A unique aspect of the practice is that it exclusively represents sponsors, which augments the firm’s prestigious reputation in the field. Clients describe the lawyers as ‘an incredibly good team’ and say that they ‘provide work of the highest overall quality’. The practice represents somewhere between 100 and 150 families of funds in a soup-to-nuts fund formation offering that clients say is ‘absolutely market leading’.
Most of the team’s venture fund work arises out of its Menlo Park and Boston offices, though a smattering is done in New York. The firm’s total immersion in the venture capital world and complete focus on emerging technologies gives it great credibility in these sectors across the US, and clients say the team is also ‘first to mind for fund-work in China’.
CLIENTS: The firm’s venture fund client roster includes Accel, Benchmark Capital, Blue Run Ventures, Technology Crossover Ventures, The Tiger Fund, The Virgin Green Fund and Union Square Ventures.
INDIVIDUALS: Steven Franklin is a founding partner of the firm, and heads the tax and venture capital and private equity fund groups out of Silicon Valley. Clients ‘particularly recommend him for China funds’ and rate him as ‘laid back, easy to work with and really good - he provides top-quality work and is able to defend his positions well’.
PRACTICE: Clients state that WilmerHale’s venture fund formation practice provides ‘service-oriented, creative and innovative solutions’ resulting in a ‘very high level of service’. The firm’s strength in this area originates out of a wedding of original WilmerHale lawyers with hires from renowned East Coast technology boutique Testa, Hurwitz & Thibeault in 2004. Three partners at the firm focus exclusively on fund formation in Boston and New York, with support from other partners, counsel and associates who spend some of their time in the field. Clients say they have a ‘strong level of professionalism and know the players in the market’. In 2008, the team represented 35 funds on the GP side and 45 LP investors demonstrating the ‘impressive, balanced practice’ that clients recommend.
The practice’s work runs the gamut of technology funds, with an emphasis on healthcare, life sciences and particularly IT.
Highlights in 2008 included representing Carmel Ventures in connection with the formation of its third early-stage venture fund focused on Israel, Carmel Ventures III. The single closing achieved $235m in partner commitments. Additionally, WilmerHale advised Canaan Partners on the organization of its eighth venture capital fund, Canaan Venture VII, which raised $650m to focus on investments in technology and healthcare companies in the US, Israel and India. Another significant engagement was the formation of North Bridge Venture Partners 7, which held a single closing to accept $525m in LP commitments.
CLIENTS: Clients include Carmel Ventures, Emergence Capital Partners, Kreos Capital, Baker Brothers Investments, North Bridge Venture Partners and Canaan Partners.
INDIVIDUALS: Thomas Beaudoin chairs the fund formation group in Boston. Clients rate his ‘very good knowledge’ and recommend him as ‘commercial and responsive’. A William Caporizzo in New York is singled out by clients for his ‘professionalism and creativeness’.
PRACTICE: Five partners have a focus on venture capital fund formation at Morgan Lewis in a practice that clients rate as ‘superb’. A portion of the firm’s expertise in this arena arises out of the practice acquired from San Francisco-based technology firm Brobeck, Phleger & Harrison on its dissolution in 2003. However, Morgan Lewis has added its impressively integrated national platform to this specialist expertise, resulting in a fund formation practice that is ‘great at venture capital work’. The venture fund specialists fit into a larger group with experience across the full range of investment funds and spread across the firm’s offices across the US.
The practice is relatively balanced geographically and in terms of client base, though its reputation certainly rests predominantly on its representation of LP investors rather than GPs. A long-standing A-list client of the firm is Kleiner, Perkins, Caulfield & Byers - in 2008 the firm worked on Kleiner Perkins Fund XII in addition to its ‘green growth’ and China funds. Other highlights include the representation of Generation Investment Management’s Climate Solutions Fund. The practice is a forerunner for funds focused on climate change and cleantech, perhaps as a reflection of its experience with emerging companies in this growth sector.
CLIENTS: Clients include Kleiner, Perkins, Caulfield & Byers, Doll Capital, Voyager Capital, Samsung Ventures America, DFJ DragonFund, Mid-Atlantic Venture Funds, SJF Ventures, and Generation Investment Management.
INDIVIDUALS: Louis Singer in New York is chair of the private investment funds practice, and is known for his ‘strong practice across fund types’. Peter Phleger in San Francisco impresses clients as an ‘excellent fund formation lawyer’.
PRACTICE: Proskauer Rose LLP represents venture capital funds under the umbrella of its wider private equity fund formation practice, and though it is better known for these larger-size funds it nevertheless has a definite market presence in the venture space. The firm inherited a number of venture capital specialists following the demise of technology firm Testa, Hurwitz & Thibeault and the venture-focused aspect of its fund formation practice benefits as a result. Clients say that the ‘service is first-rate’ with ‘senior-level attention’ and a ‘high level of responsiveness’.
The practice is best known for representing institutional investors on the LP side, but does have some GP work. Proskauer Rose LLP’s full service capacity and national platform is attractive to clients who can leverage the firm’s ability to act as general counsel to portfolio companies as part of their general fund services. Clients appreciate the lawyers’ ‘ability to find creative and workable solutions to problems that arise in the course of business’.
CLIENTS: Clients include .406 Ventures, Clarus Ventures, Frazier Healthcare Ventures, New Leaf Venture Partners, SV LifeSciences and Third Rock Ventures.
INDIVIDUALS: Robin Painter is the Boston-based fund formation practice co-head, and is the best-known lawyer at the firm for venture fund formation. Clients say that she is ‘top notch’ with ‘good all-round skills and commercial sense’. ‘She figures out how to get things accomplished’.
PRACTICE: The venture fund formation practice at DLA Piper has, according to clients, ‘a growing presence in the market’. The group splits its focus between venture capital and private equity, and is distributed across the firm’s Boston, Seattle, Chicago, New York and Atlanta offices.
The practice tends to act at least 60% of the time on the sponsor-side of funds, though it also does a lot of work for institutional investors and funds-of-funds. One of DLA Piper’s key strengths is its international platform, and the venture fund formation practice does a significant amount of work for China and Israel-facing funds.
One highlight of 2008 was representing Qiming Venture Partners II in a $300m fund formation. Another significant representation was of Ignition Capital Partners I in a $250m fund formation.
Clients say the team is ‘very responsive, and does a great job of making clients feel like they’re the top of the agenda’. However, in the US the firm does not yet have the profile or market presence, particularly in Silicon Valley, that characterizes the top-tier contenders.
CLIENTS: DLA Piper’s client roster comprises of a wide range of venture and private equity funds including Mid-Atlantic Venture Funds, Vanguard Ventures, Qiming Venture Partners and Ignition Capital Partners.
INDIVIDUALS: Howard Rosenblum in Boston chairs the fund formation and operations practice. Along with fellow Boston partner E Michael Collins he is considered by clients to be ‘on the A-list of fund lawyers’.
PRACTICE: A global firm rather better known for its private equity prowess, Latham & Watkins LLP nevertheless possesses a reputation for venture capital fund formation. Clients say that ‘service at Latham & Watkins LLP is superior’ and rate the lawyers’ ‘ability to explain complex matters in a comprehensible manner’ and ‘responsiveness’.
The firm is particularly noted for its energy and infrastructure fund formation, which together provide a useful background of experience for funds looking to invest in the burgeoning cleantech sector.
While the venture capital sector does play a part in Latham & Watkins LLP’ success, its focus is undoubtedly at the higher end of the market, and consequently it does not have the market profile in this sector of some of the top-ranked practices.
CLIENTS: Fund clients include Aberdare Ventures, Accel Partners, Benchmark Capital, InterWest Partners, Mayfield Fund, Meritech Capital Partners, New Enterprise Associates, Oak Investment Partners, Redpoint Ventures, Skyline Ventures, Sequoia Capital and VantagePoint.
INDIVIDUALS: Clients rate Washington DC-based partner Barton Clark for his ‘strong subject matter knowledge and timeliness’.
PRACTICE: Morrison & Foerster has six partners with a focus on venture fund formation, in a practice that has a small but nonetheless significant share of the market. The venture fund formation practice is instructed by a balanced spread of sponsors and LPs, and is considered by clients to provide ‘an outstanding level of service’, with lawyers who are praised as ‘responsive and timely’.
The firm’s work in this area generally reflects current trends in the market, with clients including funds focused on cleantech, consumer technology and life sciences. Highlights of 2008 include advising Longitude Capital on its $325m Longitude Venture Partners life sciences fund and Anthem Venture Partners on a $100m strategic fund.
CLIENTS: Anthem Venture Partners, Longitude Capital, Ford Ventures and Deep Fork Capital are all fund formation clients of the firm.
INDIVIDUALS: Paul Lion in Palo Alto is one of the central figures in the practice, and is regarded by clients as ‘very capable’ in this area. Kenneth Muller, who primarily works out of the firm’s San Francisco office, also comes ‘highly recommended’ for venture fund formation work.