SEATTLE/PORTLAND, Ore. – Looking to capitalize on an under-served population of technologists, Friedman, Billings, Ramsey Group Inc. together with area entrepreneurs David Billstrom and Will Neuhauser at the end of April launched the $50 million-targeted FBR CoMotion Venture Capital I LP to invest in the Pacific Northwest. Neuhauser and Billstrom declined to say when the fund was slated to close.
“Intel Corp. has more employees in Oregon than in California. Then there is Microsoft Corp. and all the dotcom guys. There is an incredible mass of technology oriented people here,” said Billstrom. “At the same time, according to the National Venture Capital Association, the Pacific Northwest got less than 1% of the total venture capital money invested in 1998 and only 4% in 1999…we see great deals here that are not getting funded or not getting funded right.”
FBR CoMotion Venture Capital will back early-stage Internet infrastructure businesses, Internet-related technology companies and dotcoms in the business-to-business and e-commerce related industries. Neuhauser said the fund would not invest in consumer branded Internet companies. The vehicle will likely back between 20 and 24 companies, with an average investment of approximately $2 million.
The new VC shop will also act as an accelerator for some of its portfolio companies, Billstrom said. It has room for three six-person start-up companies in its Seattle office, while its Portland office can accommodate one start-up company. FBR CoMotion Ventures will provide companies in its accelerator with legal, marketing, accounting and other professional services.
Senior executives at FBR previously had invested in Neuhauser and Billstrom’s Internet search engine Quando, which the pair sold to Infoseek Corp., now part of Go.com, in January 1999. Billstrom and Neuhauser left Infoseek in August 1999 and began to do some angel investing in the Pacific Northwest. They then began discussions with FBR about creating a more formal effort, which resulted in the launching of FBR CoMotion Venture Capital.
The fund’s general partners are Billstrom, Neuhauser and FBR. All three are investing in the fund, but Neuhauser declined to disclose the amount. He also would not reveal the vehicle’s management fee or carried interest structure, but described them as being in line with industry standard levels. The fund’s limited partners are mostly wealthy individuals and some small institutions, Neuhauser said. He declined to provide the names of any of the LPs.
The vehicle’s investment committee consists of Neuhauser, Billstrom and a third person appointed by FBR. Neuhauser declined to identify the third member of the investment committee. The fund currently has one entrepreneur-in-residence, Gerry Zyfers, who helps with due diligence work and the evaluation of business plans. Neuhauser said the fund would likely hire some additional investment professionals in the future.
Even though the fund had yet to close, it has done three deals with capital provided by FBR, backing technology/Internet infrastructure start-ups: RuleSpace Inc., MeasureCast.com and ThinkShare.