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  • Spreading the Wealth in Va.

    By Shannon Henry
    Washington Post Staff Writer
    Thursday, February 10, 2000; Page E01

    With firsthand experience of the Northern Virginia tech boom under his belt, millionaire investor Mark Warner has set up four venture-capital funds in other parts of Virginia that haven't seen as much success.

    Warner, a Democratic former U.S. Senate candidate from Virginia who is expected to run for governor next year, is a founder and managing director of investment firm Columbia Capital Corp. in Alexandria. He has amassed a personal fortune from technology deals.

    Because the new venture funds would finance primarily companies in their own back yards, the plan could help economically depressed areas of the state benefit from the new economy.

    But if the grass-roots effort doesn't work, Warner could be criticized for investing in areas of the state that simply don't have good tech deals, and those who contributed to the funds mostly wealthy individuals would not be pleased.

    "If we could get a winner in Danville, it would do more to change the community than any government program," says Warner, who believes this to be the first time a network of private, regionally based venture funds has been set up within a state. "The goal here is to have an economic return."

    The first of these funds, Southwest One in Blacksburg, which manages $5 million, was formed in 1998. But the plan really kicked in last month, when Southside Rising in Roanoke ($6 million) and Monument Capital in Richmond ($15 million) finished the fund-raising process.

    Envest Capital of Hampton Roads is expected to start doing business this month, with about $10 million to $15 million to invest.

    Warner is now considering the creation of a fifth fund that would be based in Charlottesville.

    He says that while some areas will be harder to seed than others, there is technology innovation in each of the regions that needs funding. Warner expects the biggest challenge will be to find management talent for the new companies.

    To help, he's enlisted friend Steve Walker of Steve Walker & Associates to personally work with each of the new funds. Walker has years of experience as the chief executive of Trusted Information Systems Inc., in Glenwood, Md. He now invests and advises local start-ups.

    Warner says the funds typically will invest about $500,000 to $750,000 in each deal, although investments in Richmond and Hampton Roads are likely to be higher.

    The would-be candidate won't say exactly how much of his own money is in the four funds; he did say that, combined, it's "seven figures."

    ==========

    The controversial state-funded Herndon think tank, the Center for Innovative Technology, could become a lot more influential if Virginia's General Assembly approves a proposal by Gov. James S. Gilmore III (R).

    The governor is calling for an extra $20 million per year for CIT to set up research grants and build a development base in Virginia. That's on top of the $13 million CIT now receives annually from the state.

    In preparation for this possible windfall, CIT's president, Anne Armstrong, who has been leading the group since August, has announced a restructuring of CIT.

    "The changes are an effort to make it easier for people to understand what we do," says Armstrong. The main change is the appointment of a new management team five senior staff members, each in charge of one part of the group's mission.

    Armstrong says the new CIT's top goals are to promote long-term innovation through studies and research and development, and to encourage technology business in Virginia by starting specific programs such as VirginiaLink, a statewide telecom network.

    ==========

    Sumo wrestling and bowling may not immediately come to mind when you think of the Northern Virginia Technology Council.

    But the NVTC is on a mission to hold more creative events, trying to attract fun-loving techies and strengthen its network of younger business people.

    Last Thursday the NVTC held a "Kill The Millennium Bug Party" for about 250 people at the McLean Hilton. NVTC President Bobbie Kilberg says the bash was the first where the group tried to get the younger, non-senior managers of the group's member companies to come out to an event.

    Kilberg says it worked: The event was all fun and games no speeches. And anyone who saw Landmark Systems Corp. chief executive Kathy Clark sumo wrestling Mindbank Consulting Group President Neal Grunstra has the event indelibly etched in their memory.

    Next up are the NVTC's "Anti-Establishment Awards," the brainchild of Completed Systems Inc. President Anne Crossman, who thinks start-ups don't get enough credit. Nominations will be taken until tomorrow in categories such as "Most Likely to Get Venture Backing" and "Visionary of the Year."

    The awards will be held in May at Bowl America in Chantilly.

    ==========

    Turns out the stargazers and the angels won't align.

    Plans to merge Art Bushkin's Stargazer Group with John May's angel investing clubs, which include the Dinner Club and the eMedia Club, have fizzled.

    Stargazer is a privately funded project that aims to encourage entrepreneurship. Bushkin and May said in November that they would combine their resources to operate the two separate arms of Stargazer: a for-profit side that would house the clubs, and a philanthropic side that so far has given two "genius" type grants.

    But May and Bushkin discovered that each has so many diverse projects in the works that, conceptually and legally, it had become too difficult to figure out how to make them mesh.

    "It was just too complicated," according to May, although he says he and Bushin will still collaborate. "There were too many moving parts."

    Bushkin says that he still intends to have a for-profit part of Stargazer, but that he and May had differing priorities and commitments. "It was driving the lawyers nuts," he says.

    Send tips and tales of the digital capital's local people, deals and events to Shannon Henry at henrys@washpost.com.


    © 2000 The Washington Post Company

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