Venture Coaches closed its first fund in September 2001. Although details of the fund have not been announced, the firm's managing partner Claude Haw says it is "in the ballpark of $40 million.”

Meanwhile, Skypoint spent most of 2001 trying to round up money for its second fund. Partner Peter Charbonneau says his firm is hoping to close the US$100-million fund in the next couple of months. Originally, Skypoint had hoped to close much earlier, but the events of Sept. 11 and the telecom downturn made it tougher for the firm to raise a telecom-specific fund.

"Certainly, the timing could have been much better,” admits Charbonneau. "But I think when you look at the larger pools of capital, they're going to stay in the markets. The private equity side of things is still a very strong value proposition.”

As is the case with many VCs, each firm dipped into their respective funds before they officially closed. During 2001, Venture Coaches made new or follow-on local investments in Meriton Networks, Dragonwave, TrueContext, Seaway Networks and Spotwave Wireless. Skypoint, which usually spends more on each investment compared to Venture Coaches, invested in Galazar Networks and TrueContext as part of its second fund.

While neither firm lost any of its portfolio companies to attrition, each had to trim staff at some of their respective startups. In particular, Skypoint leaned on Bitflash, March Networks and WebHancer to slash 45, 71 and 35 jobs, respectively.

Looking forward, the No. 1 priority for each firm is to nurse their investments through an extended economic downturn, particularly in the telecom sector.

To do that, both will need to find late-stage investors to partner with. At Venture Coaches, Haw is confident of his ability to make later-stage friends. Of course, it doesn't hurt that Haw's relationship with local Newbury Ventures representatives Ken Wigglesworth and Conrad Lewis goes back a few years. All three were closely involved with Newbridge Networks in the 1990s, and Newbury led follow-on rounds in Haw's portfolio companies Meriton and Spotwave.

As of Dec. 31, Venture Coaches had invested a little more than 25 per cent of its $40-million fund. Over the next year it will pick three or four new investments, while the rest of the fund will go to follow-ons.

Skypoint, on the other hand, is on pace for one investment every three months, which should facilitate the addition of three new portfolio companies by year's end. Charbonneau says his firm has plenty of money left to tap from its second fund.

"The majority of it. I'd say we probably have over 80 per cent (of that US$100 million) left to spend. We would expect our funding should last us for the next three or four years,” he says.