Coral vets start large equity fund -Minneapolis / St. Paul Business Journal http://www.bizjournals.com/twincities/stories/2002/12/09/story2.html?p... http://www.bizjournals.com/twincities/stories/2002/12/09/story2.html?p...
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SeeallnewslettersDec8,2002,11:00pmCST
Coral
vets
start
large
equity
fund
Mark
Reilly
Senior
Reporter
A
trio
of
venture-capital
veterans,
including
the
co-founder
of
Coral
Ventures
and
the
leader
of
its
health-care
investment
practice,
have
launched
a
private-equity
fund
targeting
the
life-sciences
sector.
Coral,
meanwhile,
will
likely
shift
more
toward
pure
technology
investments.
Lumina
Ventures
was
founded
earlier
this
year
by
Coral's
Managing
Partner
Peter
McNerney
and
General
Partner
Karen
Boezi
along
with
former
Warburg
Pincus
executive
James
Thomas.
According
to
the
firm's
Web
site,
the
group
plans
to
invest
12/29/2013 12:36 PM
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Coral vets start large equity fund -Minneapolis / St. Paul Business Journal http://www.bizjournals.com/twincities/stories/2002/12/09/story2.html?p... http://www.bizjournals.com/twincities/stories/2002/12/09/story2.html?p...
in
medical-technology
and
health-care
businesses
in
various
stages.
Officials
at
Lumina,
which
has
offices
here
and
in
New
York
and
Palo
Alto,
Calif.,
would
not
comment
on
funding
goals.
But
industry
observers
and
others
who
have
seen
documents
from
Lumina
said
the
firm
is
trying
to
amass
up
to
$250
million
in
capital.
At
least
some
potential
investors
in
Lumina
are
known.
The
New
York
City
Employees'
Retirement
System,
which
controls
investments
of
$32
billion,
committed
$20
million
to
Lumina
last
month,
said
NYC
spokeswoman
Nicole
Lise.
New
York's
teachers'
retirement
fund
committed
an
additional
$15
million.
The
University
of
Michigan's
Board
of
Regents
voted
over
the
summer
to
invest
$15
million
in
Lumina.
It
is
unknown
whether
Lumina
has
actually
closed
on
those
deals
yet.
In
addition,
securities
filings
from
Lumina
made
earlier
this
year
refer
to
sales
of
limited-partnership
interests
of
roughly
$28
million
to
investors
in
Minnesota,
Illinois
and
Connecticut.
On
its
Web
site,
Lumina
states
that
it
plans
to
focus
on
sectors
such
as
pharmaceuticals,
medical
devices,
biotechnology
and
diagnostics.
Within
that
niche,
the
company
apparently
plans
to
cast
a
wide
net:
It's
looking
to
back
both
startups
and
larger
companies
as
well
as
fund
spinoffs
or
roll-up
deals.
It
looks
to
invest
between
$5
million
and
$25
million
in
companies,
but
initial,
early-stage
investments
could
be
as
small
as
$100,000.
Lumina's
launch
comes
at
a
time
when
venture
capitalists
are
faced
with
a
curious
dilemma:
Valuations
are
depressed,
making
new
investments
relatively
inexpensive.
Yet
the
sour
economy
has
left
many
investors
pessimistic,
making
it
hard
to
pull
new
funds
together.
Rick
Brimacomb,
president
of
Sherpa
Partners
in
Edina,
said
that
institutional
investors
might
be
hamstrung
from
joining
new
VC
funds
by
rules
governing
investment
allocation.
For
example,
consider
a
fund
that
puts
a
ceiling
on
VC
investments
of
15
percent
of
its
total
holdings.
A
manager
might
invest
12
percent
of
the
fund
in
venture
deals
and
think
there's
room
for
more.
But
if
a
falling
stock
market
lowers
the
value
of
the
fund's
public
holdings,
the
value
of
VC
investments
could
rise
above
15
percent
without
the
manager
doing
anything.
In
that
case,
Brimacomb
said,
"you
couldn't
put
money
into
a
VC
even
if
you
wanted
to."
Some
questioned
the
makeup
of
Lumina's
partnership.
Steve
Lisson,
editor
of
the
Austin,
Texas-based
news
site
InsideVC.com,
said
he
is
skeptical
of
firms
consisting
only
of
partners
with
financial
backgrounds
rather
than
those
with
recent
industry
experience.
"The
most
lucrative,
massively
returning
opportunities
are
always
the
smallest,
early-stage
investments"
that
can
be
missed
by
partners
without
recent
operational
experience,
he
said.
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Coral vets start large equity fund -Minneapolis / St. Paul Business Journal http://www.bizjournals.com/twincities/stories/2002/12/09/story2.html?p... http://www.bizjournals.com/twincities/stories/2002/12/09/story2.html?p...
But
others
in
the
venture-capital
community
spoke
highly
of
the
strong
background
of
Lumina's
principals,
particularly
McNerney.
"Pete
has
a
reputation
as
one
of
the
truly
stellar
VCs
in
town,
especially
when
it
comes
to
the
medical
sector,"
said
Paul
Knapp,
president
of
both
Minneapolis-based
Space
Center
Ventures
and
the
Minnesota
Venture
Capital
Association.
McNerney
started
his
career
in
the
health-care
industry,
working
as
a
manager
for
Baxter
Healthcare
Corp.
before
founding
the
startup
Memtec
in
1986.
Lumina,
on
its
site,
touts
its
partners'
backgrounds,
noting
that
17
of
the
36
companies
they
worked
on
at
previous
firms
went
public;
another
seven
were
purchased.
Boezi,
who
joined
Coral
in
1994,
had
previously
worked
with
Thomas
at
Warburg's
medical
technology
group.
Thomas,
who
worked
at
Warburg
for
12
years,
has
led
deals
in
companies
such
as
American
Medical
Systems
of
Minnetonka
and
Xomed
Surgical
Products
Inc.,
Jackson,
Fla.
The
creation
of
Lumina
will
necessitate
a
shift
in
focus
for
Coral
Ventures,
the
sixth-
largest
VC
firm
in
the
Twin
Cities
with
more
than
$340
million
raised,
according
to
research
by
The
Business
Journal.
Since
its
founding
in
1983
by
McNerney
and
Yuval
Almog,
Coral
has
traditionally
maintained
twin
focuses
on
information
technology
and
health
care,
with
McNerney
and
Boezi
handling
health-care
portfolio
companies.
Observers
said
Coral
will
now
concentrate
its
future
investments
on
tech
ventures
(Almog's
preferred
area).
McNerney
has
said
that
the
decision
to
separate
from
Coral
was
based
on
the
view
that
smaller
VC
firms
shouldn't
spread
their
focus
too
thin.
The
equity
market
is
shifting
into
two
models,
he
said.
"One
side
is
large
firms
that
can
focus
on
multiple
sectors
because
they
have
the
staff
to
do
them
justice,
and
the
other
side
is
specialty
firms."
There
apparently
won't
be
a
change
for
Coral's
existing
health-care
investments;
McNerney
and
Boezi
will
continue
to
work
with
Coral
as
partners
of
its
existing
life-sciences
funds
and
work
with
its
portfolio
companies
in
that
sector.
Almog
could
not
be
reached
for
comment.
mreilly@bizjournals.com
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