January 31, 2011
Elizabeth M. Murphy
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Re: Release #1A-3111; file No S7-37-10 Exemptions for Advisers to Venture Capital Funds, Private Fund Advisers With Less Than $150 Million in Assets Under Management, and Foreign Private Advisers (the Proposed Rules)
Dear Ms. Murphy,
I wish to comment on the Proposed Rules as follows:
I have been a venture capitalist for 25 years, having founded my firm, Tullis-Dickerson ("TD") (also known as Tullis Health Investors) in 1986.
TD has raised 6 professional venture funds with total capital of approximately $400 million. TD has generally been a lead investor and has invested in more than 50 private venture capital stage health care companies, including PSS Worldmed (the largest US distributor to doctor's offices and nursing homes), Adams Respiratory Products (developer of the popular cough and cold remedy Mucinex), Adiana (pioneer of a new permanent contraceptive device now popular with patients and doctors), Biorexis (developer of a sustained release format for biotech drugs), Genoptix (the leading provider of diagnostic tests for blood borne cancers like leukemia and lymphoma) and many others.
I wish to add a comment to those made by the National Venture Capital Association (NVCA) in which TD is a member and who's comments TD generally supports.
Venture Capital Fund Life: In my opinion, it is not necessary, nor is it necessarily of benefit, for the Proposed Rules to define a venture capital fund as having a minimum life of ten years. We have recently organized two venture capital funds in which the defined fund life is 5 years. The central difference in these shorter lived funds is their initial investment period, which is just one year. TD's 5 year life funds have invested in important venture stage portfolio companies including Vidacare (pioneer of a new method of access for intravenous solutions called intraosseus treatment, which is revolutionizing the speed by which ambulance, emergency and military personnel can provide life saving treatment to their patients), Sirion (which developed now marketed popular new prescription drugs for the eye), Estech (offering better solutions for atrial fibrillation) and others. Shorter life venture funds offer many advantages. They are appealing to investors who desire more rapid returns and liquidity than a putative ten year life fund allows -- and today's investors often seek to get their money back sooner. Additionally, shorter life funds offer greater transparency of investing -- fund investors often see the actual deals prior to or at the time they invest (or, at worst very shortly after they invest) instead of waiting many years to learn what the fund has actually selected for investment. So-called "style drift" is less a concern if all the Fund's initial investments are made before or soon after a fund is organized. Finally, there are fewer years in which fees are charged to the investor, if the fund life is shorter.
With these additional comments, I support the positions well articulated by the NVCA.
CEO and managing Partner
Tullis-Dickerson/Tullis Health Investors