One of the region’s biggest venture capital firms has closed on its seventh fund.
Durham-based Hatteras Venture Partners closed on a $126.8 million fund – Hatteras Venture Partners VII.
Clay Thorp, general partner, says the firm – which has invested in 89 companies and has $900 million under management – had a series of good outcomes acting as “wind at our back.”
Three of its portfolio companies saw recent exits – from Aledade’s buy of Iris Healthcare to Bio-Rad’s buyout of Dropworks. Hatteras was also the co-lead of multiple rounds for Standard Bariatrics, which recently sold to Teleflex Inc. (NYSE: TFX) for about $300 million – “a really nice outcome for us," Thorp said.
For Fund VII, a securities filing shows 83 investors contributing so far, and more may be coming. The filing caps the round at $250 million.
Thorp acknowledges a tough market. Many investors are “taking stock and taking a step back.” But Hatteras found enough investors willing to take the risk – and he said deal appetite is out there.
Standards, however, are higher.
That includes for Hatteras, which typically sees about 800 potential companies a year, but funds just five to seven.
“The bar is very high and the deal flow quality is also very high,” Thorp said.
For entrepreneurs looking for a piece of Hatteras’ new fund, an introduction goes a long way.
“Deals that come in that are referred by a close source, someone we’ve worked with before, generally fare better,” Thorp said. “Those companies also tend to be better coached, so they have advice from operators or other investors who have a sense, not just of what we’re looking for, but what other investors tend to look for.”
Thorp’s best pitch advice?
“Take the time you need to take before coming in the door to really shore up your story and to build your kitchen cabinet of advisers who will lend credibility to your effort,” he said.
In addition to Fund VII, Hatteras also closed on a $15.2 million Hatteras Opportunity Fund I. Thorp describes it as a co-investment vehicle to continue fueling companies in the Hatteras portfolio.
“A lot of times we’ll have companies that need more capital,” he said. “This gives us an overflow opportunity to put additional money to work.”
Hatteras typically focus on life sciences firms. According to its website, Fund VII has already invested in firms such as Cardiosense, Boomerang Medical and Gozio Health.