FAIRFAX, Va. – Branching out from Silicon Valley to the nation’s Capitol, Mitsubishi International Corp. became the latest venture capital operation to set up shop in Fairfax County, Va. Armed with $10 million, the Japanese giant will make direct investments in early-stage technology companies and take limited partnership interests in regional venture funds.
“This area is quickly expanding in communications, not so much in hardware, but especially in software,” said Satohiro Akimoto, vice president of Mitsubishi International and a manager of the firm’s venture capital initiative.
Fairfax County, just outside of Washington, is home to a number of wireless, telephone, Internet and aerospace giants, including Nextel Communications Inc., Cable & Wireless USA, PSINet Inc. and General Dynamics.
Still, venture firms were slow to take notice of potential corporate – and even government-related – spin-offs. Five years ago, New Enterprise Associates was the only firm on the ground, completing just one investment. Last year, with 31 shops in Fairfax County, including Draper Atlantic, General Atlantic Partners and Novak Biddle Venture Partners, venture investment in the region totaled $3.54 billion, according to Venture Capital Journal publisher Venture Economics.
“Venture capitalists in New York and California regarded Washington, D.C. and Fairfax County as just a government town and would say that no good ideas come out of government,” said Gerald Gordon, president of Fairfax County’s Economic Development Authority. “And, I would say, You mean like the Internet or NASA?'”
Already, Mitsubishi has carved out a stake in Tysons Corner, Va.-based Monumental Venture Partners LLC’s second fund, MVP America Fund LP. Monumental Venture Partners, formed in 1999, invests in seed- and early-stage technology companies whose offerings can be aligned with those of MVP’s corporate limited partners. The MVP America Fund is an $11 million vehicle that was closed last year.
Mitsubishi will continue to make other investments in local venture funds, as well as direct investments in local early-stage technology companies spanning the Internet and telecommunications. By making early inroads, Mitsubishi hopes to bridge new technologies into the Japanese marketplace. At the same time, the firm and its Japanese parent will arrange vendor financing for Virginia companies building production facilities in Asia and Japan, Akimoto said.
New York-based Mitsubishi International Corp. is a subsidiary of Tokyo’s Mitsubishi Corp. It began a venture program in 1983 in Palo Alto, Calif. and now counts more than 40 U.S.-based companies in its portfolio. Internet, semiconductor, computer hardware and software companies are represented in its $252 million investment portfolio.