Morgenthaler is one of the oldest private equity investment firms in the US investing through both venture capital and leverage buyout transactions. Morgenthaler operates two connected private equity businesses:[1]
Morgenthaler Ventures – venture capital business focused on life sciences and information technology investments
David Morgenthaler founded the firm in 1968 after a career as an operating executive. From 1957 until 1968, Morgenthaler was CEO of Foseco, Inc., a manufacturer of specialty chemicals owned by early venture capital firm J.H. Whitney & Co. After selling his venture-backed business to an international company, Morgenthaler decided to pursue venture capital investing on his own.
In addition to his role in building a nationally focused venture capital firm, Morgenthaler also took a leadership role in establishing the legitimacy and potential of the nascent venture capital industry.
He served from 1977 to 1979 as the President and then Chairman of the National Venture Capital Association (NVCA).
During Morgenthaler's tenure at NVCA, he was called to testify before Congress in support of the capital gains tax reduction enacted in 1978. He was also involved in changing the ERISA legislation in 1979, allowing for pension funds to invest in private equity for the first time. (See also: Early history of private equity: Regulatory and tax changes)
Morgenthaler was awarded the first National Venture Capital Lifetime Achievement Award in 1998 for his role in the emergence of the venture capital industry. Morgenthaler was inducted into the Private Equity Analyst's Venture Capital Hall of Fame.
Earlier in his career, Morgenthaler was a member of the management team of several young growth companies. He received both a BS and a MS degree in mechanical engineering from the Massachusetts Institute of Technology in 1941.
Morgenthaler died in June 2016, at the age of 96. He worked up until the very end, with his son noting that he was testing an app from his hospital bed. "At age 96, almost 97, who does that?" his son said.[2]
Investment funds
Since the 1980s, when Morgenthaler began raising private equity funds from institutional investors in the early 1980s, the firm has raised over $2.8 billion of investor commitments.
1985 - Morgenthaler Venture Partners II - $ 30m
1989 - Morgenthaler Venture Partners III - $ 65m
1995 - Morgenthaler Venture Partners IV - $ 135m
1998 - Morgenthaler Venture Partners V - $ 300m
2000 - Morgenthaler Venture Partners VI - $ 575m
2001 - Morgenthaler Venture Partners VII - $ 850m
2005 - Morgenthaler Venture Partners VIII - $ 450m
2008 - Morgenthaler Ventures IX - $ 400m+
Historically, Morgenthaler funds have made both venture capital and leveraged buyout investments out of the same fund. In November 2008, Morgenthaler Ventures exceeded its fundraising goal and closed its ninth fund (Morgenthaler Venture Partners IX) at slightly more than $400 million. MVP IX is the first Morgenthaler fund to focus solely on venture capital investments. By comparison, Morgenthaler Ventures was allocated approximately $315 million to invest in the previous fund.[3]
In August 2013, General Partners Gary Little, Rebecca Lynn, and Gary Morgenthaler formed a new and separate firm called Canvas Venture Fund with an inaugural $175M early-stage IT-only fund. These three general partners continue to serve on the boards of their Morgenthaler portfolio companies, including Lending Club (the fourth largest Internet IPO since 2001 behind Facebook, Twitter and Google), MuleSoft, Evernote, Doximity, etc. They were later joined by Paul Hsiao, a 10-year partner at NEA, in May 2014. Canvas was named the No.1 "VC Firm to Watch" by Forbes on its 2015 Midas List.[4]
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