Highland closes $300m retail fund

Venture firm Highland Capital has closed a $300 million, retail- and consumer-focused fund, which will be led by Staples co-founder Tom Stemberg and Ted Philip, a founding member of search engine and web portal Lycos.

Highland Capital Partners has closed its Highland Consumer Fund I on $300 million (€221 million). It is the venture capital firm’s first fund focused on growth-stage consumer- and retail-related businesses, as opposed to consumer-related tech companies.

The fund will be led by Tom Stemberg and Ted Philip, recent additions to Highland’s team of managing general partners who have extensive retail industry experience.

Stemberg joined Highland in 2005 and is best known for co-founding big-box office supply chain Staples in 1986. Philip, who joined the firm about a year ago, was a founding member and held senior executive roles at search engine Lycos, in addition to having worked for consumer-oriented companies including Disney, Hasbro and Bombardier Recreational Products.
“Since the technology boom of the late 1990s, the consumer market has been underserved by the venture capital community,” Stemberg said in a statement. “Through a focused approach and strategy, we look to address that opportunity immediately.”

The fund went to market in the fourth quarter of 2006, and midway through the first quarter of 2007 held a first close at more than two-thirds of its total committed capital, according to Michael Gaiss, Highland’s vice president of marketing. It has already invested in Rec Room Furniture and Games, an Illinois-based retailer of game room furniture and equipment, and jointly invested with Highland Capital Partners VII in Pharmaca, a pharmacy and health store chain with 12 US locations.

The Highland Consumer Fund will typically make investments of $5 million to $25 million and will operate out of the firm’s Lexington, Massachusetts office. Founded in 1988, Highland invests in seed, early and growth stage companies in the communications, consumer, digital media, healthcare and information technology markets. Last year, it closed Highland Capital Partners VII on $808 million.