Plymouth Ventures closes $16M for second fund, looking for more

Plymouth Venture Partners has closed on $16 million and hopes to at least double that amount before it’s done raising cash for its second fund.

After the $16 million close was revealed in a regulatory filing, CEO Mark Horne said the company expects to close on another $16 million in the fall and may look to push the total to $40 million.

Horne characterized the fundraising environment as “very difficult,” but said the success of Plymouth’s first fund helped the cause. The company’s $23 million first fund led to 29 investments, with 13 exits already complete and another six exits in discussion, Horne said.The fund became fully invested in early 2009.

Plymouth’s biggest winner may have been Pump Engineering, a pump technology firm that was acquired for $27 million by Energy Recovery Inc. late last year. Plymouth put $2.4 million into Pump Engineering, Horne said.

“We’ve never seen a period where there’s been so much activity from strategic acquirers,” Horne said.

Given today’s notoriously weak IPO market, those strategic acquirers are a blessing for venture firms because they present the most likely exit scenario for investors.

Rather than focusing on a specific industry, Plymouth generally focuses on a region — the Great Lakes. Ann Arbor, Mich.-based Plymouth’s proximity to its portfolio companies helps its partners be more involved with them. While Plymouth’s investments are typically based in the Midwest, it’s important to the firm that its portfolio companies are not overly reliant on the economically struggling region for customers, Horne said.

Plymouth’s portfolio companies include Cleveland-based CleveX, which has developed a skin biopsy device, and Bethlehem, Pa.-based Neuromonics, which has developed a treatment for tinnitus.

Photo from flickr user AMagill