What a long strange trip it has been: Highway 12 Ventures to wind down new investing

Venture capital firms are bit like old soldiers. They never really die, they just sort of fade away. And that appears to be what’s happening at Highway 12 Ventures, the 11-year-old Boise venture capital firm which announced today that it will not pursue a new fund and as a result wind down operations over time.

Co-founder Mark Solon wrote in a blog post that there’s a growing “tension” in the venture capital business between managing existing portfolio companies — which are taking longer to exit — and the need to raise more cash to support new investments. He writes:

“The idea of raising a third fund right now (despite genuine interest from both new and existing investors) is hard to imagine given the plate of work our partners have in front of us to create the most value we can in Fund I & Fund II. We are extremely optimistic about our portfolio of companies and believe that they will drive very handsome returns for our investors. Our focus right now is doing the most we can to make that happen.”

We’ve seen other venture capital firms choose a similar course, most notably Frazier Technology Ventures in Seattle. In 2009, it too chose not to raise a new fund and manage its existing portfolio.

Mark Solon

Highway 12 was active in the Pacific Northwest for a short spell after it was founded, co-investing with OVP Venture Partners in Boise’s M2E Power and Portland’s Max Viz. (I bumped into Solon on occasion at Seattle events, and was always struck with his enthusiasm for the startup process).

The firm later focused exclusively on the Rocky Mountain region. (Idaho, Utah, Colorado and Montana).

It was a good niche for the firm, which had a solid reputation and worked hard to build bridges with venture capitalists in other tech centers.

And it was not like there was a lack of activity in the region. Colorado actually attracted more venture capital dollars in the first half of this year ($277 million) than Washington state ($249 million).

The firm’s portfolio included @Last Software — which was acquired by Google — and Logoworks — acquired by H-P.

As The Wall Street Journal notes, it is a bit unusual for a venture capital firm to take such a public approach in announcing its wind down. But Solon said that the firm wanted to notify entrepreneurs and venture capitalists about its status, telling The Journal that they “thought it was a disservice to entrepreneurs in the region to slowly disappear.”

  • Victor

    Good grief. As one of the startup guys who pitched to a large group a few years back, I had the unpleasant experience of Mark Sloan interrupting my presentation with some ignorant comment while seated in the crowd. The conversation afterwards only showed him as arrogant and uninformed. The reason for Mr. Sloan’s obnoxious behavior? He funded a company he thought was in the same space (they are not, and it went out of a business a couple years later). That was just one of the many disappointing instances I encountered during my fundraising tour that year. Overall, the VCs in the Northwest were just underwhelming.

    Of course, Highway 12 isn’t the only mediocre VC firm in the Northwest. With little value-add and generally lacking the hustle that is needed, it is no wonder they are finding it difficult to raise more funding, even as we heading into a new boom. 

    Not accepting VC money and bootstrapping despite the difficult economic landscape was the single best decision we made as a startup. We are thriving as a result.

    • Nnaostring

      …and let’s not forget that M2E power contradicted the laws of physics…

      • Victor

        Of course it wasn’t a shocker to find OVP and @Ventures in that deal, same flock of sheep.

  • PNW-Startups

    Victor-

    Your experience was the same as ours– Mark’s lack of start-up investment experience (and lack of hands-on knowledge of the sectors he was trying to invest in) has been apparent for years.  His personal style is one of trying ‘bluff’ his way through discussions with bluster and intimidation–  as if his daily ‘pick-up hockey game’ was validation of instant-strong-wrong opinions on complex software business issues.

    The region’s better off without all these VC-funds-that-never-should-have-been-born.

  • Guest

    Mark probably has one of the worst, if not the worst, reputations in the PNW as far as being a combination of incompetence and arrogance.  I have friends in Boise and he’s absolutely DESPISED there.  I met him once and agree he’s arrogant beyond belief – very east coast in a bad way.  Sounds like a positive thing for the PNW start-up community overall.