New name. New money. New partner. New start.
The venture capital company spun off by the Momentum economic development organization dissolved the original $2.9 million fund Dec. 31 and announced the formation of a $10.3 million successor Monday.
Formed 10 years ago as Spokane Capital Management, the company has been renamed Northwest Venture Associates, said Tom Simpson.
He and Jean Balek-Miner are co-managers of the company, which doubled the money of the investors in its first limited partnership.
Money invested by limited partners is managed by a general partner like Northwest Venture Associates, which gets a share of the profits for its services.
A second partnership, Inland Northwest Investors, was formed by Spokane Capital in 1996. Simpson said about half the $6.1 million raised for that fund has been invested.
The new fund is Northwest Venture Partners.
Although the partnership starts with $10.3 million, Simpson said that sum could be doubled by the U.S. Small Business Administration if the fund is licensed as a Small Business Investment Corporation.
Simpson said he and Balek-Miner have already met once with SBA officials in Washington, D.C., and will return there later this month.
There is only one SBIC in Washington now, he said, and SBA officials say the state is under-represented in the program.
If the fund receives a license, the SBA will make a loan in an amount double the investment made by the limited partners, he said.
But the partnership does not have to repay the loan until its investments are liquidated or distributions are made to investors.
The SBA would also get a small share of the profits, Simpson said.
He said Northwest Venture Partners would be one of the largest venture capital pools in the region if the SBA grants the SBIC license.
Simpson said the general partnership will also be strengthened by the participation of Trillium Corp., a Seattle holding company with $450 million in assets.
Trillium, which has made a significant investment in the limited partnership, brings additional contacts and expertise to the table, he said.
Simpson said funds in Inland Northwest Investors and Northwest Venture Partners will be invested on a pro rata basis until the older, smaller fund runs out of money.
Also, the new fund will not participate in any companies Inland Northwest Investors has funded, he said.
The ban will preclude claims managers are trying to bail out earlier investments that might fail, he said.
Venture capitalists typically invest in companies too small to sell stock to the public but mature enough to demonstrate they have a viable product or service in the marketplace.
The first fund, for example, funded The Waterford retirement community on the South Hill and Eagle Hardware and Garden before that retailer went public.
Those were two of the fund’s more profitable investments, said Simpson, who did not become a managing director of the general partnership until 1995.
The new fund could eventually invest as much as $2 million in as many as 20 companies. Simpson said he and Balek-Miner are already looking at potential investments in the Seattle and Portland areas.
No Spokane company is currently on the short list of candidates for funding, he said.
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