OVP Venture Partners to close after nearly 30 years

The OVP team will be disbanding over the next five years

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.

OVP’s funds over the years

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.

  • Bob Silver

    Sorry to hear this. OVP is a terrific group doing terrific work for businesses and entrepreneurs in our region. I consider myself fortunate to have been able to work w/ a number of the partners over the years. They’ll be missed.

  • http://www.facebook.com/profile.php?id=33567 Nikesh Parekh

    Very sad to see this loss to the Seattle start-up community. I hope others fill the financial and leadership void left by OVP

  • Jeff Erwin

    OVP will be missed. Great people. Chad invested in my first company back in 1990, and he has been a friend ever since.

    Seattle’s loss.

  • http://twitter.com/toddhooper Todd Hooper

    Working with Chad, Mark, Lucinda and the rest of the OVP team was great – I was very fortunate to start my career in Seattle at Watchguard, which in turn spawned a number of companies. The last thing Seattle needs is *less* investors. :(

  • Michael

    If you look at Washington State Investment Board portfolio … WSIB hasn’t invested in any (minus Menlow) venture captial funds in the last 5 years.

  • andrew

    It was long time about the time to have OVP turn the lights off. Some of the partners became lazy over the time, other never become good.

  • OscarG49

    Great story, they should be commended for all their service. It is a risky business, lower the a .300 hitter in baseball like success, but forever death a new comes up http://www.businessinsider.com/groupons-co-founder-eric-lefkofsky-has-transferred-nearly-19-million-shares-2012-9

    • http://twitter.com/Nanostring Nanostring Founder

      oh c’mon! They got paid pretty good for their “service”. Even now, 2% of $250M is $5M/yr split only between two partners?! What about all the teachers, cops, firefighters in Washington and Oregon whose pensions bombed because of OVP’s incompetence. This is a travesty. Spare us the crocodile tears…

      • CEO

        Krassen, you’ve been whining about OVP for four years now by my count, and yet Nanostring, the company you got kicked out of seems to be doing fine. Get some new material champ!

        • http://twitter.com/Nanostring Nanostring Founder

          thanks for following me and Nanostring so closely; Waite has been greatly marginalized on the Board, his cronies pushed out, and this is the reason co. is doing great. Compare with Complete Genetics where his incompetent buddy CEO stayed till the end and burned investors.

          still I have to continue to be active until he actually leaves the Board: it’s very bad perception to have a proven loser as a Director, especially when the co is trying to IPO.

  • Dave

    It should not be surprising, but it is disappointing. OVP has been a Seattle stalwart for a long time. OVP was also one of the last hybrid investors that did biotech, healthcare technology, software and other technologies out of the same fund and the only one locally. Clearly the results did not support them raising more money, but it is a definite loss. Healthcare technology funding, like Nanostring or Talyst, is a particular loss that will slip under the radar screen. There are not many funds that do that type of investing and Seattle has created some leading technologies in that broad space in the past–Rosetta, ATL, etc.. That said, the OVP portfolio looks quite far flung by space–cleantech, biotech, healthcare, SaaS, fitness equipment and others.

  • ByeByeRainCity

    The energy seems to be draining out of Seattle. Frazier – gone. NWVP – gone. Atlas – gone. OVP – gone. Ignition is doing a lot of their investing in the bay area. Madrona remains as the last man standing totally focused on Seattle. Its been a slow death as Seattle never recovered from the dot-com bust. Dozens of people I know have moved to the bay area in the last year…literally…there is like a Seattle ex-pat club down here…now Seattle is mostly a remove dev center for FB, Google, etc. There will be exceptions like Zillow and Isilon but you can toss a rock down 101 and hit more companies the size of Zillow and Isilon than you’ll see in Seattle over the next 5 years. Good night my sweet prince…I loved living up there but I had to leave…at least I have company when I go to the local sports pub to watch UW games.