Memorandum to: State Investment Council
From: Timothy Walsh, Director
Subject: Proposed Investment in Edison Ventures Fund VII, LP
The New Jersey Division of Investment (“Division”) is proposing an investment of $35 million in Edison Ventures Fund VII, LP. This memorandum is presented to the State Investment Council (the “Council”) pursuant to N.J.A.C. 17:16-69.9.
As part of NJDOI’s mandate to invest in top quality venture capital firms on a direct basis, staff and SIS are recommending an investment in Edison Ventures Fund VII. Edison Venture Fund’s strategy of investing in late-stage growth businesses diversifies and complements the Division’s existing portfolio of early-stage venture funds. The late-stage strategy has generated cash-on-cash returns that are top quartile relative to the Venture Economics universe of venture capital funds. A report of the Investment Policy Committee (“IPC”) summarizing the details of the proposed investment is attached.
Division Staff and its private equity consultant, Strategic Investment Solutions, undertook extensive due diligence on the proposed investment in accordance with the Division’s Alternative Investment Due Diligence Procedures. As part of its due diligence process, staff determined that the fund has not engaged a third-party solicitor (a “placement agent”) in connection with New Jersey’s potential investment.
We will work with representatives of the Division of Law and outside counsel to review and negotiate specific terms of the legal documents to govern the investment. In addition, the proposed investment must comply with the Council’s regulation governing political contributions (N.J.A.C. 17:16-4).
Please note that the investment is authorized pursuant to Articles 69 and 90 of the Council’s regulations. The Edison Ventures Fund VII, LP will be considered a “venture capital” investment, as defined under N.J.A.C. 17:16-90.1.
A formal written due diligence report for the proposed investment was sent to each member of the IPC and a meeting of the Committee was held on January 18, 2012. In addition to the formal written due diligence report, all other information obtained by the Division on the investment was made available to the IPC.
We look forward to discussing the proposed investment at the Council’s January 26, 2012 meeting.
Source: State of New Jersey State Investment Council