Big-Bank Venture Firm Planning a $400M Fund

Article excerpt

Financial Technology Ventures, a venture capital firm backed by some of the largest financial services companies, is hoping to collect $400 million for its second fund.

According to sources familiar with the plans, the San Francisco firm will close the fund in the next 30 to 60 days and expects most of the 21 limited partners who invested in the first fund, including Credit Suisse Group, Bank of America Corp., Bank One Corp., Deutsche Bank AG, and Wells Fargo & Co., to invest in the second.

The firm, which declined to comment for this article, is managed by James C. Hale 3d, Robert Huret, Scott Wu, and Richard Garman -- all former executives of Montgomery Securities in San Francisco.

FT Ventures invests in middle- and later-stage technology companies that develop products and services for the financial services industry. The firm uses its base of industry partners to learn about new technology ventures that might make good investments.

This strategy works the same way for the firm's investors. Jeremy Marshall, managing director at Credit Suisse First Boston, said FT Ventures acts as a clearinghouse for the limited partners to exchange ideas, or a "community where you have FT Ventures in the middle." An investor can call the firm and ask its partners if they have heard of a particular technology company, he said.

Such funds allow banks to make investments in promising emerging technologies without assuming all the risks on their own.

FT Ventures launched its first fund with $200 million two years ago. So far half of it has been invested in 19 companies throughout the United States and Canada. The firm is considering using a small portion of the second fund to invest overseas.

Three of the companies in which it invested with the first fund have had initial public offerings. …