Half of the partners who raised the 11th venture fund for Bay Partners last year have either left or expressed plans to leave, according to two sources close to the firm.

Bay Partners XI, which closed last year with $290 million in commitments, featured six general partners. But two of those GPs have left in the past year: Loring Knoblauch, who had been with the firm since 1999, and Dino Vendetti, who had been with Bay since 2001. The status of a third GP, Chris Noble, who has been with the Cupertino, Calif.-based firm for six years, is being called into question. One source close to the firm tells PE Week that Noble plans to leave Bay, while another source says Noble has already gone. Managing Partner Neal Dempsey says that Noble is still on board. “Chris is very much a part of this firm and a full-time employee,” he wrote in an email to PE Week. “As for why people are talking about his departure, I can only say that they are [doing] just that, talking.”

Noble did not respond to several messages from PE Week regarding his departure.

Bay’s 10th fund, which closed with about $365 million in 2001, returned a negative IRR of 18.3%, as of Dec. 31, according to investment data from the California Public Employees’ Retirement System, an LP in the fund. But fund performance may not have been the issue with the departing GPs. One source close to the firm says that the three GPs have left in part because of an issue that plagues many Silicon Valley firms: succession. The source says that Noble, Vendetti and Knoblauch were unhappy with the “vastly different managing style” of Dempsey, who took the helm of Bay two years ago as firm founder John Freidenrich segued into retirement.

“Neal isn’t quite as egalitarian [as Freidenrich],” says the source. “I don’t think that sat well with some of the people who’d come to the firm on John’s watch.”

Dempsey did not respond when he was asked in an email if he attributed the exodus to his management style.

How LPs will react to the partnership changes remains to be seen. It’s not clear whether the GP departures will trigger a contract clause that would allow LPs to pull their money out, which happened at San Francisco venture firm VSP Capital last year. LPs ultimately pulled the plug on VSP’s third fund, which totaled $185 million (see PE Week, 6/13/05). One of the sources says that LPs of Bay, while not happy about the departure of its GPs, appear to be taking a wait-and-see stance. Another says that LPs have expressed concern, but are unlikely to reduce the size of their commitments for now.

Investors in fund XI, according to a release issued by Bay last year, include Paul Capital Partners, Horsley BridgePartners, AlpInvest Partners, CS First Boston, BP Pension Fund, Portfolio Advisors and GIC Investments, along with several other new and returning limited partners. Several LPs were contacted for this story and some declined to discuss while others did not return PE Week’s request for comment.

Dempsey insists that Noble is “actively engaged” with his portfolio companies. Noble has been focusing on wireless equipment and Internet infrastructure companies and is listed as a board member for seven companies for Bay, including M-factor and PicksPal.

Vendetti, who joined Bay Partners from Paul Allen’s investment firm Vulcan Ventures, left Bay earlier this year to become the third investing partner at Formative Ventures in Palo Alto, Calif. Vendetti continues to sit on the boards of two Bay portfolio companies: Ultra-Wideband components company Staccato Communications and Pulsewave RF, which develops power amplifier semiconductors. Vendetti did not respond to email requests for comments.

PE Week was unable to determine Knoblauch’s whereabouts by press time. Of the last two boards that Knoblauch served on for Bay, one company, ElectriPhy, which developed semiconductor chips for high bit-rate DSL, went under last year. Meanwhile, Dempsey took over Knoblauch’s other board seat at Silverstorm, formerly known as Infinicon, a startup focused on the high-performance computing market.

Besides Dempsey, who joined the firm in 1989, Bay has four other partners: Bob Williams, a longtime general partner who Dempsey has said is being groomed to succeed him; Atul Kapadia, who joined Bay from his post as CEO of Maple Networks in late 2003 and was promoted to GP in 2004; Erin Chin, who joined Bay as a venture partner last year and was promoted to GP this year; and Neil Sadaranganey, who joined in 2005 as an EIR and was also promoted to GP this year.

According to his bio, Chin co-founded Internet software company WebSpective, which was acquired by Inktomi for $106 million in 1999 (it raised $13 million from VCs). He also co-founded semiconductor developer TelASIC Communications, which has so far raised about $83 million from ComVentures and RedPoint Ventures, among other investors.

Sadaranganey ran product management at Good Technology before joining Bay. Before that, he helped start the IP traffic management company Afara WebSystems, acquired by Sun Microsystems in 2002 for $28 million after raising $5 million from Sequoia Capital.

Within the last month, Bay added Richard Gorman as a venture partner. He most recently was a senior vice president of products at Siebel Systems.