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Venture firms keen on Oregon

A recent Oregon law calling for the state to invest in homegrown companies is catching the attention of venture capitalists in Washington.

By Tricia Duryee
Seattle Times Eastside business reporter

Because many venture-capital firms in this state frequently invest some of their money in Oregon, chances are that a local firm will get some of the $100 million the Oregon Public Employees Retirement System is to invest by 2008. Oregon doesn’t likely have venture-capital firms large or experienced enough to handle the money alone.

The Oregon Investment Council, which is overseeing the process, is working to determine how the program will be managed and which venture capitalists might get the money, but it seems clear that Northwest firms, specifically Washington ones, will get some.

"There is clearly a desire to see the money being put to work locally," said Gerry Langeler, a partner at OVP Venture Partners, which has offices in Kirkland and Portland. "Local (venture-capital) companies are best suited for that. They know the entrepreneurs, the service providers and have all the good local connections."

OVP already gets money from Oregon’s $40 billion retirement system. In the past year, it has made two investments in Oregon and has one on the horizon, Langeler said.

Todd Jones, a spokesman with the Oregon State Treasury, said half a dozen firms in and outside the state submitted proposals how the money might be managed. The only announced one is Credit Suisse First Boston, a New York-based investment bank. Jones would not identify the others. A firm chosen to manage the money could invest it directly in Oregon companies or, more likely, go through venture-capital firms.

Andy Dale, the managing partner of Buerk Craig Victor, a venture-capital firm in Seattle, said he wonders how the money will be managed. The firm has a $26 million fund and has made three investments in Oregon.

"We are always building relationships with investors," said Dale, noting that his firm hasn’t made any substantive efforts with Oregon so far. "We think it could be great for the regional venture-capital community."

Although many of the finer points of the plan have yet to be determined, Harvey Mathews, technology and education lobbyist for Associated Oregon Industries in Salem, said the bill’s intention is to help spur economic development in the state.

"Oregon has a problem with capital for fledgling businesses," Mathews said. "This is seen as a way to get that capital and to build small businesses, which create jobs."

OVP did not support the bill at first because it was setting aside too much money for Oregon startups, Langeler said. The firm feared that if too much money were available, bad ideas would be funded along with good ones.

Now that the amount of money being set aside is smaller and a clause allows the state to back out if too few good companies warrant investment, Langeler said the plan is better. He said it might even lead to smaller VC firms getting a foot in the door with a larger investor.

The law is expected to add 15,000 jobs and $3.9 billion in revenue from startup companies by 2008, Mathews said.

Tricia Duryee: 206-464-3283 or [email protected]

Copyright © 2003 The Seattle Times Company

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