Jerusalem Venture Partners (JVP), one of Israel's largest venture capital firms, announced yesterday the interim closing of its latest fund, JVP IV, at $350 million, which brings the total funds under management by JVP to $600m.

JVP IV, which started raising capital 10 months ago, still hopes to reach its stated goal of $500m., company sources said, although they acknowledged that this would be difficult.

"We have more investors interested and lined up," the sources said, "but Israel's tax laws are deterring them. The Nasdaq crisis and the intifada are bad enough, but the tax situation is mentioned most often by potential investors as the biggest obstacle."

While JVP was not represented at the IVA press conference yesterday (see related story on this page), the firm's sentiments and recent experience are squarely consistent with the reality of the situation as described by fellow VC fund managers. Remarkably, if the IVA projections are borne out, JVP alone will already have been responsible for one-third of all the monies to be raised by Israeli VC funds this year.

Meanwhile, JVP is positioning itself as "an international communications venture capital firm, with a focus on early-stage communications and Internet infrastructure companies." JVP is especially targeting the niche of optical communications, building on its track record highlighted by the sale of optical communications portfolio company Chromatis to Lucent, which holds the Israeli record for the largest acquisition ever ($4.7 billion).

JVP IV will be managed by offices situated strategically around the world, company sources stressed. "Our New York office is going to be as large as our Jerusalem office," they emphasized. "We are co- locating on Madison Avenue, and we will be active in the New Jersey- Washington DC communications technology corridor."

JVP IV revealed that such prominent investors as Infineon, Nortel Networks, Columbia University, and the government of Singapore have joined the JVP network of funds for the first time. Repeat JVP investors in Fund IV include France Telecom, Boeing, Reuters, MIT, Flag Venture Partners, Horsley Bridge, Merrill Lynch Ventures, AXA, Jafco, Bank Leumi, and Hebrew University. The identities of three other JVP IV investors have not yet been disclosed.

JVP also announced that the firm's network of strategic and private equity investors has expanded to include Oak Investment Partners, Battery Ventures, Worldview Technology Partners, Lucent Venture Partners, Apax Partners and 3i. JVP IV, along with co- investors, have already jointly invested $47m. in six new optical networking, data communications, and Internet infrastructure companies.