Ventana Taps Global Corporations For Funds
A trendsetter? Maybe.
Irvine-based venture capital firm Ventana Global, founded in 1974, has been using money from corporations to make investments in start-up companies for a couple of decades, a trend that only more recently has burgeoned in the U.S.
About half of the capital Ventana has in its funds and portfolio companies comes from corporations, and not just from the pension funds or insurance entities or other institutional investors that normally bankroll venture capital firms.
Ventana backers include Japan’s Fujitsu Ltd., Mitsubishi Chemical Corp. and Kenwood Corp., Switzerland’s Asea Brown Boveri AG and Mexico’s Petr & #243;leos Mexicanos, or PEMEX.
About 95% of Ventana’s funds come from foreign investors. In the U.S., Waste Management Inc. is among Ventana’s backers.
In other countries, most venture capital investments come directly from corporations looking to make strategic investments. In the U.S., some technology and other companies once spawned by venture capital now have turned into venture capitalists themselves.
“It’s a rising trend,” said Thomas Gephart, Ventana’s chairman. “The rules are changing. We see that trend growing 30% to 50% per year.”
Microsoft Corp., Intel Corp., Cisco Systems Inc., Boeing Co., General Electric Co. and Oracle Corp. are among the big companies that make venture investments in smaller ones.
Strategic placements by corporations are a way for public companies to make progress in research and development without hurting earnings reports, Gephart said, since investments are accounted for on a different part of the balance sheet.
“It’s a very powerful tool,” Gephart said.
Ventana’s 80 investing partners are based in 20 countries. The firm has invested $230 million of capital under management, and the syndicated funding of its portfolio companies is $3 billion.
Ventana has offices in San Diego, Santiago, Chile and Mexico City. There are affiliate offices in Brazil, Bermuda, Belgium, Denmark, Norway and Japan.
Ventana is big on Mexico, which has made some strides in growing its economy and is one of Orange County’s top trading partners.
“Mexico is pushing entreprenuerism and venture capital. They will step it up in a big way,” Gephart said.
Gephart said Mexico’s President-elect Vicente Fox has an agenda to grow the country’s economy and is hoping venture capital-fueled entrepreneurs will lead the way.
“They will press it to link with firms like ours,” Gephart said.
The firm already has a $34 million active fund to promote the development of the environmental industry in North America with an emphasis on Mexico.
And Ventana has been growing its operations in Irvine. It just formed a $50 million fund that will be focused on a new area, the convergence of biotechnology and information technology.
“The new fund allows us to sit down and think of the next three to five years,” Gephart said.
The new fund will be split among seven companies in the information technology and seven in the life sciences, where companies are starting to use information technology to speed healthcare processes and medical research, he said.
“Some Japanese are keen on these convergence technologies,” Gephart said.
Ventana plans on deploying the capital from the new fund in Southern California companies. And though Orange County does not have many biotechnology firms, Gephart said he is happy to be here.
“Orange County is diversified. It has a broad foundation,” Gephart said. n
