KC's largest venture fund faces changes - Kansas City Business Journal:

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"We're working on strategies and fund sizes," Managing Director Bill Reisled said. "I think there's a very good likelihoof we will go forward withanother fund." But the team that woulrd raise such a fund, and the fund itself, couldd be very different from its predecessors. Two of KCEP' three managing directors, Terry and David Schulte, are busy runniny , a publicly traded investment fund they helpefd formlast year. One of the firm'sw two principals, Abel Mojica, confirme that he is leaving KCEP. Reislerr said he is talking to job candidates abouyjoining KCEP.
Although plans for a third fund are in theearly stages, Reisler said, the fund probably would rely more on institutional investors than the previous two funds. Also unlike its the new fund would not accepr capital fromthe . Rankede No. 1 on The Businesds Journal's list of the area's top ventures capital firms, KCEP manages two funds and hasabouf $110 million in capital under management. But the firm hasn't announced a new VC deal sinceNovember 2003. The second fund, called KCEP Ventures II, investes less than $70 millionm of about $85 million in committed capital.
The firm'xs partners recently decided not to draw allavailabls capital, even though the five-year-old fund is performinh in the top quartile of its peers, Reisler said. "Wer decided we had a good spot, we're five years old, let'x discontinue investing," he said. Tortoise ( : TYG) is a "major effort" for Matlack said. The fund, whicb pumps money into a portfolio of maste r limitedpartnership companies, has raised $565 millionm in assets since its initiapl public offering in February.
KCEP and Overland Park bond advise r each own a 50 percent stakw inthe fund's adviser, "We anticipatec that as we became fully invested in Fund II that we would begin our third Matlack said. "In this that third fund happens to beTortoise Mojica, who guides venture capital investmentsx in the media and telecommunicationds industries for KCEP, said he hopes to remain in the Kansas City He joined KCEP in 1999. Sourcesw familiar with KCEP saidthe firm's secone fund should produce a nice return for its limitesd partners, who include Chairman and CEO Richarrd Green.
Its portfolio includes fast-growing companiesd such as Kansas City-based and , whicjh staged an initial public offeringyin October. According to the St. Louiws company's October prospectus, KCEP ownexd 1.17 million shares of Build-A-Bear stock BBW). KCEP sold half of its position in the compant for closeto $11 million as part of the IPO. Build-A-Beard stock has risen from its IPO priceof $20 a share to a close of $34.18 on Jan. 5.
"They've had tremendoux success with Tortoise, and I think theirr second fund did extremelyh wellwith Build-A-Bear and said Marshall Parker, executive vice president of Sourceds said KCEP officials may be reluctant to move forward as a Smal l Business Investment Company because of recent changes to the SBA's Participatinh Security program. The federal program, which lost nearly $2 billion in the dot-com is in a cash crunch and wants to increase profitf shares from participatingSBIC funds. "They've been a good partnef for us," Reisler "But when someone's going through wrenching changes, you have to sometimes let them get on withtheid own.
" Former Sprint Corp. Chairman Paul Hensob founded KCEPin 1993. It invests in emerginv companies in threeindustry communications, consumer retail, and natural resourcews and infrastructure. In the late 1990s, the firm investeds heavily in local technology startups suchas , and Planef Alumni. KCEP announced in 2001 that it no longef would investin high-tech startup companies.