The venture capital fund that helped spark Richmond’s best-known Internet-economy busts is going out of business.<\/p>\n
Monument Capital Partners, once considered an answer to the area’s dearth of cash for technology startups, does not plan to invest in any more companies. Its investment committee has decided against trying to raise more money.<\/p>\n
“I think everybody realized it was not a good time to raise another fund,” said Ivor Massey Jr., a member of the investment committee and an investor in the fund.<\/p>\n
The amount of venture capital invested nationally has declined for several years. A study by Ernst & Young and VentureOne showed that quarterly investments were at their lowest point in five years in the first quarter of this year.<\/p>\n
Founded in January 2000 with the backing of successful technology investor and, at the time, gubernatorial hopeful Mark R. Warner, Monument Capital secured commitments for a $25 million initial fund. It has invested about $20 million and decided not to call on investors for the rest of its commitments.<\/p>\n
“The reality is we don’t have the track record today to go raise a second fund,” said Monument’s managing partner, T.J. Daly. “I think everybody would love it if we could raise a second fund. But the fund-raising environment is so difficult it wasn’t even worth trying.”<\/p>\n
Monument now has about five companies in its portfolio.<\/p>\n
Daly will spend the next 18 months working with those companies, helping them pursue additional funding and performing other duties as a member of their boards of directors.<\/p>\n
The fund’s last investment was in January, when it committed an unspecified amount to Digital Harbor, a Reston software company.<\/p>\n
Monument’s first investment, about $1 million, went in early 2000 to Richmond-based Homebytes.com, an Internet business with ambitions to cash in on the nation’s for-sale-by-owner real estate market.<\/p>\n
The firm turned out to be a classic dot-com story of meteoric rise, seemingly unlimited promise and ultimately a resounding thud. Homebytes shut down in May 2001.<\/p>\n
The technocentric fund also had a stake in East3 Ltd., which attempted to combine NASA research and video games to help people improve their attention skills. The company’s secured creditors, which included Monument and Massey, auctioned East3’s assets in April 2001 after the company failed to find new sources of money.<\/p>\n
Neither Daly nor Massey said he regrets Monument’s investment decisions.<\/p>\n
“Obviously hindsight is 20-20,” Daly said. “At the time, with the information we had and the market we were in, no.”<\/p>\n
Massey said some investments were based on good ideas and promising technology but suffered from “extremely flawed” management and business-plan execution. He holds hope that the remaining companies may yet reward investors down the road.<\/p>\n
Venture capitalists typically make money when the companies they invest in are sold or go public.<\/p>\n
“Thus far you’d be hard pressed to make a case that it’s been a success,” Massey said of Monument Capital. “It has not been an inexpensive part of my education.”<\/p>\n
Several of the Richmond companies backed by Monument – including PowerPact LLC and NewLife Technologies – remain in business. Two PowerPact executives last week were named finalists for Ernst & Young’s annual Virginia Entrepreneur of the Year award.<\/p>\n
“On the whole, we’re pleased with the momentum of the portfolio,” Daly said. “If we could get any type of firming up with the economy or public equity markets, I think there are a number of companies that are well positioned.”<\/p>\n
Warner also helped established similar funds in three other parts of Virginia before becoming governor. He invested $500,000 of his own money in Monument.<\/p>\n
“The other funds we’ve started around the state are doing well,” he said. “In retrospect, the Monument Capital Partners fund hit the market at the worst possible time, at the peak of the Internet bubble. Some of the companies they’ve invested in still have a solid future. There is still a need for early stage capital in central Virginia.”<\/p>\n","protected":false},"excerpt":{"rendered":"
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