OpenView Halts New Investments, Dismisses Staffers

Boston-based OpenView Venture Partners has dismissed most of its investment staff and will halt new deal activity, The Information first reported on Tuesday.

Originally published in the December 6th edition of Transacted.

Blackstone is growing its AUM with a new focus on wealth management products

The early-stage firm has raised $2.4 billion since inception and employed more than 100 people, according to its LinkedIn.

The firm’s portfolio companies were caught off-guard by the news, with at least one executive noting their surprise in early public comments. A subsequent portfolio communication from OpenView noted that the firm has entered into a “voluntary suspension period,” with senior leadership saying that “after extensive discussion and evaluation, the partners do not have confidence in the ability to deliver on our commitment” to the firm’s new fund, raised earlier this year.

OpenView did note that it will continue in its current board roles and retain reserve funding capacity.

The news follows a string of high-profile departures from 17-year-old OpenView. Recent exits include founder and senior managing director Scott Maxwell, partners Mackey Craven, Ricky Pelletier, and Sanjiv Kalevar, and investor Andrew Camel.

Unconfirmed speculation points to the possibility that the surprise departures may have triggered a “key man” clause within the fund’s limited partnership agreement. Such a clause hands limited partners the authority to halt new investments should certain general partner leadership leave the firm (and should no continuity agreement be reached between GP and LPs).

Even if such a clause came into play, OpenView’s senior leadership appears to have made the decision to preemptively wind down the firm, rather than try to hammer out a go-forward plan with its LPs.

The underlying cause of the leadership tumult remains unknown, though recent performance may have been a factor. OpenView’s sixth fund, a $450 million vehicle raised in 2020, was most recently marked at a negative 10 percent IRR.

Previous winners have also faltered. Recent filings show OpenView sold off more than 10 million shares of expense management software platform Expensify in August, having held a portion of their original position since the company’s 2015 Series C. The value of that holding at exit was nearly 90 percent below the company’s 2021 peak shortly after its IPO.

The lackluster performance was reflected in OpenView’s fundraising efforts for its seventh flagship fund. The firm held a $570 million final close in March of this year, nearly 30 percent below its stated $800 million target.

The venture environment has certainly become more turbulent of late, but there’s probably more going on behind the scenes here — expect the full story to come out in the coming weeks.

Sam Hillier

Sam Hillier is a reporter at Transacted covering private equity and investment banking. He previously spent time as an investment professional focused on direct buyouts, as well as an earlier strategic advisory stint.