The message on the Web site of OVP Venture Partners kind of says it all:
“We are not currently accepting business plans.”
After nearly 30 years of evaluating startup companies throughout the Pacific Nortwest, the Kirkland-based venture capital firm has decided to toss in the towel. Luke Timmerman at Xconomy has the scoop, reporting that partners Mark Ashida, Lucinda Stewart and Carl Weissman are losing their jobs at the end of the year as part of a gradual wind down.
The three remaining partners — Gerry Langeler, Chad Waite, and Bill Funcannon — will continue to operate the existing $250 million fund over the next four to five years, Xconomy reports. There are no plans to seek a new fund, a decision that essentially will end one of the longest running venture capital operations in the region.
The wind down marks a blow for the Pacific Northwest venture capital community, which has suffered through a series of fits and starts over the past 30 years. Other funds have wound down (Frazier Technology Ventures) or left town (Atlas Venture and Mohr Davidow Ventures). But none had the history of OVP, which originally started as Olympic Venture Partners (but was forced to change the name by the U.S. Olympic Committee).
Todd Hooper, a Seattle entrepreneur who previously worked at OVP-backed WatchGuard and raised money from the firm for his startup Napera Networks, called the closure a “huge loss.”
“Now that enterprise market is heating up again — unfortunately we have one less VC with experience in the space,” said Hooper, who now serves as CEO of Zipline Games.
Formed in 1983, OVP certainly has been a stalwart of the region’s startup and venture capital communities over the years. Operating seven venture capital funds with more than $750 million under management, OVP has bankrolled more than 130 companies, from network appliance makers like WatchGuard to biotechnology firms such as Allozyne to Internet upstarts such as DataSphere to clean tech companies like Energ2.
Nearly two dozen of its portfolio companies have completed IPOs, while over 30 have been sold to publicly-traded companies.
Even so, the performance has been rocky.
According to a report from the Washington State Investment Board, OVP’s sixth fund, formed in 2001, is showing an internal rate of return of negative 17.3 percent. That’s among the worst performing funds in the WSIB’s portfolio. OVP’s seventh fund, formed in 2006, is showing a negative return of 7.3 percent.
Of course, venture capital firms live and die by big home runs. And the ironic thing about OVP’s decision to wind down is that the company’s existing portfolio — including companies such as Symform, NanoString Technologies and Adapx — could still produce one of those huge hits.
Nonetheless, it’s getting harder for venture capital firms to raise cash. A persistent debate on GeekWire has centered around the idea of the traditional venture capital model being broken, highlighted by a report earlier this year by the Kauffman Foundation which showed that the majority of VC firms don’t outperform stock indices.
Even so, Seattle-based Madrona Venture Group successfully raised a $300 million fund earlier this year, the biggest in the firm’s history. Ignition Partners, Voyager Capital and Frazier Healthcare Ventures also are reportedly trying to raise new funds.
Greg Gottesman, a partner at Madrona, said that they were sorry to hear about the news.
“All the partners at OVP have played an important and positive role in our tech ecosystem for a very long time. OVP helped put Seattle venture capital on the map,” said Gottesman. “I am confident that they will continue to help entrepreneurs whether at OVP or in whatever they do going forward.”
We’ve reached out to OVP for comment, and we’ll update this post as we learn more.