Two investment banks, Catalyst Group and Seabury Group, are teaming up to help VCs with their "B companies"-those that aren't stars but have promise.

The two banks hope to serve venture firms that, thanks to bulging IT portfolios and the pressure to invest big new funds, don't have time to devote adequate attention to such companies themselves.

Catalyst and Seabury plan to help venture investors find strategic partners for the companies or to profitably exit from them without an IPO. The targets are technology companies with $1 million or more in revenue that are not growing fast enough or tackling a big enough market to make it alone.

"It's not low-hanging fruit because if it was obvious what these companies ought to be doing, then management or their investors would figure it out," said George T. Guernsey, a founder and managing director of Seabury Technology LLC, a Seabury Group subsidiary.

And, unlike a decade ago, there are few banks interested in brokering these mid-range deals.

"In talking to 20 venture groups or so, not a single one has turned us away," said Robert Dunn, a Catalyst founding partner.

"They've all said that is absolutely something they needed and they see the need accelerating over the next 12 to 18 months."

An example of the type of deal the firms are looking to do is the 1997 sale of Softbridge Inc. to Teradyne Inc., which enabled Softbridge's lead venture investor, Fund UK Ltd., to exit from the company.

New York-based Seabury brings its private placement expertise to the alliance, while Catalyst, which has offices in Bethel, Conn., and Winchester, England, is experienced with mergers and acquisitions.

Reach Mr. Dunn at (203) 748- 0356 and Mr. Guernsey at (212) 284-1140.

Visit Seabury online at www.seabury.com and Catalyst at www.IT-catalyst.com.

Reprinted from Venture Capital & Information Technology, from Asset News, Wellesly, MA;
December 2001, Volume IV, Issue 12, Pp 6