O.C. Venture Fund Eyes Tech Firms
A new Orange County venture-capital fund, launched six months ago during the technology slump, will announce today that it has raised $62 million to invest in fledgling Southern California technology companies.
Although Miramar Venture Capital’s effort to secure funding has taken months longer than anticipated and fallen short of its initial $100-million goal, the founding partners declared the effort a success.
“We have to be realistic about the environment we’re in,” said Bruce R. Hallett, a managing partner of the Newport Beach venture fund.
The money was raised as technology stocks continued to nose-dive, fueling investors’ fears of risking further losses.
Indeed, overall venture capital fund-raising throughout the nation shriveled to $9.7 billion in the second quarter from $30.3 billion in the same period last year, according to statistics released Monday by Venture Economics, a data firm.
The environment has become so tough that one venture capital fund, Encore Venture Partners in Santa Monica, closed this year and abandoned technology investments. Encore had raised $150 million.
In disclosing their plans for Miramar Venture Capital last November, the founding partners had lofty goals--raising $100 million by early this year and eventually bringing in $150 million to invest.
Venture capitalists put money into start-ups hoping for big payoffs when the companies go public or are acquired.
Broadcom Corp. co-founder Henry Samueli provided a powerful lure as Miramar’s principal investor, matching funds from other investors dollar for dollar.
But Miramar’s partners have now lowered their sites, saying they hope eventually to raise $100 million.
“More experienced venture capitalists are in a better position to raise funds in the current environment,” said Adam Reinebach, Venture Economics vice president.
Although the Miramar fund is new, partners Hallett and Rick Fink are former attorneys at Brobeck, Phleger & Harrison LLP in Irvine who had helped Broadcom and other technology companies grow to prominence. The third managing partner, Bob Holmen, has held senior management positions in several technology companies.
Irvine real estate company Sares-Regis Group committed $2 million. Samueli’s participation was a key factor, said managing director John Hagestad.
Two or three years ago in technology, “too much money was raised and there was too much pressure to invest in crazy ideas. The industry has gone through a cleansing process,” Hagestad said.
He said Sares-Regis hopes to realize a $10-million return on its $2-million investment over five to 10 years.
Another $2 million was provided by Entrepreneurial Investment Corp., whose core capital is the fortune of Mexican food baron Duane Roberts of Laguna Beach.
With the stock market down, investors questioning technology, and many existing venture capital funds preoccupied with previous money-losing deals, it’s a promising time for Miramar, said Entrepreneurial Capital president Randy Luce.
“When people get nervous, it’s typically the best time to invest,” Luce said.
