Columbia Capital, one of the Washington area's pioneers in technology- and telecom-venture investing, has been raising money for its fifth venture fund.
The Alexandria firm's Columbia Capital Equity Partners IV has a goal of raising $450 million. Recent Securities and Exchange Commission filings indicate the fund and its affiliated partnerships have already raised $295 million from domestic and some foreign investors.
Columbia Capital is best known for its most famous former partner -- Virginia Gov. Mark Warner (D), who quit the firm to run for office in 2002.
Among technology entrepreneurs it has a long-established reputation as one of the region's most active investors in early-stage private telecommunications and technology companies. Its Columbia IV fund -- disregard that Roman numeral; it really is the fifth venture fund managed by the firm -- will be the first fund it has started since raising nearly $1.4 billion in three funds between 1995 and 2000.
Aside from Warner, Columbia has maintained its stable of partners who were in place during the salad days of the late 1990s: Jim Fleming, Harry Hopper, Philip Herget, Karl Khoury, Jay Markley, Jeff Patterson, Matt Newton and John Siegel Jr. More recent additions to the partner ranks are Arun Gupta, a former Carlyle Venture Partners principal who joined in 2000, and Hemant Kanakia, former chief executive of a successful Columbia portfolio firm, Torrent Networking Technology, who became a partner last year.
Like most early-stage technology-investment firms that raised large funds before the Nasdaq tech crash in 2000, Columbia has scaled back its ambitions. Its new fund will be a little more than half the size of its previous fund, the $856 million Columbia Equity Partners III, which closed in 2000.
In the 1990s, Warner and his partners at Columbia were among the nation's most successful early investors in budding wireless telecommunications companies. Columbia was among the first investors in Nextel Communications Inc. in 1987 and was an early investor in XM Satellite Radio Holdings Inc. But after 2000, it also invested in some losers in the broadband sector, such as Denver's Western Integrated Networks LLC, which filed for Chapter 11 bankruptcy reorganization in 2002, and European broadband company Pangea, which began insolvency proceedings in 2001.
Columbia's first two funds had net internal rates of return of better than 190 percent each. The two subsequent funds, raised in 1999 and 2000, fared much worse -- like nearly all VC funds raised at the time. As of Dec. 31, when the most recent data was available, both were in the red.
In the past year, Columbia has been a fairly active investor in software and wireless firms. Its recent deals include investments in Hillcrest Laboratories Inc. of Rockville, a maker of navigational software and devices for users of multimedia. In August, it participated in a large initial venture funding for Amp'd Mobile Inc., a Los Angeles reseller of wireless spectrum. Other local firms in which it has invested in the last year: Vienna-based Approva Corp., a developer of enterprise controls management software; Fairfax-based Rivermine Software Inc., a developer of telecom expense management software; Vibrant Solutions Inc., a Fairfax provider of services to help telecommunications companies track network costs; and Reston software firm Netuitive Inc.
Partners in Columbia did not return phone calls requesting comment on the new fund or the SEC filings.
Mining Backers Hit Pay Dirt
The private investment funds that backed the buyout and initial stock offering of Linthicum Heights-based Foundation Coal Holdings Inc. last year will sell at least half of their holdings in an underwritten public offering, according to SEC documents filed last week.
With their sale of Foundation stock, Blackstone Group and First Reserve Corp. will solidify Foundation's status as one of the most successful private equity deals in recent years. Foundation is a coal-mining company whose 13 mines are concentrated in Appalachia.
New York-based Blackstone and First Reserve, an energy-focused leveraged buyout firm based in Connecticut, together with coal producer American Metals & Coal International, put up $200 million to buy Foundation in August 2004. In a December IPO, they paid themselves a $319 million dividend.
In the expected offering, Blackstone and First Reserve will each sell at least 4.25 million shares, half of their stakes. American Metals & Coal will sell 1.5 million shares, also roughly half its stake.
With Foundation trading at about $37 a share -- 50 percent higher than the IPO price in December -- the three investors stand to reap $370 million.
Together with the IPO dividend, the three firms' investors will have made back roughly 3 1/2 times their initial investment, a gross profit of $490 million in less than two years. And they still control stock worth another $370 million.
Terence O'Hara's e-mail address is email@example.com.