"Two more venture capital firms — Wellesley-based Venture Capital Fund of New England (VCFNE) and Lynnfield-based Velocity Equity Partners — have suspended efforts to raise new funds, following Prism Ventureworks into the VC fundraising doldrums.
Unlike Prism, which last month said it still had funds remaining for three to five new investments but would not seek to raise a sixth fund, Velocity and VCFNE said they would no longer be investing in new companies out of their current venture funds.
Both Velocity and VCFNE said they will continue to defend portfolio companies by reinvesting in them with reserve capital. Once the last startup leaves the nest, the last remaining partner may have to turn out the lights. But Gordon Penman said he and the other partners at the long-standing VCFNE are hopeful that won’t be the case. “We’ve had some success in the portfolio and the best is yet to come from the existing portfolio,” said Penman, who is also an attorney at Brown Rudnick LLP. “Once the current environment changes, we’re hopeful that we’ll have the track record to raise another fund.” Their fourth fund, worth $25 million, closed in April 2002, Penman said.
Both Velocity and VCFNE had participated in the federal Small Business Investment Companies (SBIC) program, which co-invests government money with certified venture capital funds. "
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