PORTLAND, Ore. – Banking their hopes on the future success of the Silicon Forest, former consultants Michael Lubitz and Steve Brown are preparing to launch their first venture fund in the Pacific Northwest.
Mr. Lubitz, most recently a venture consultant to information technology businesses, and Mr. Brown, a consultant to small- to medium-size manufacturing businesses with an emphasis on marketing, plan to raise $20 million to $30 million from United States institutions, strategic corporate investors, wealthy families and foundations.
The firm, which will be called Silicon Forest Venture Partners, intends to hold an initial close or rolling closes sometime in the second half of this year. Messrs. Lubitz and Brown also will apply to the Small Business Administration (SBA) for a Small Business Investment Company (SBIC) license, which could raise the fund’s capital pool to somewhere between $60 million to $90 million.
Mr. Lubitz may be able to attract L.P.s from former business contacts he cultivated with several Japanese strategic investors while working with Kyocera Corp. in Japan.
“We’re going to be able to create a hedge against the yen,” said Mr. Lubitz, who has not worked in Japan for more than a decade but estimates he still spends three to four months a year there. “The returns [in the U.S.] are phenomenal compared to what you can get on the Japanese market.”
Northwest Deal Flow
The Northwest provides ample deal flow in the Internet/e-commerce, fabless semiconductor and imaging technology realms, and several high-profile firms have sprouted in the area, such as Olympic Venture Partners in Kirkland, Wash., and Shaw Venture Partners in Portland. Mr. Lubitz had an office at Shaw, where he worked independently as he was readying his own venture capital effort.
“[Prospective] limited partners view this area of the world as similar to Silicon Valley 25 years ago,” Mr. Lubitz said. “This has become a critical point in the semiconductor area. The timing [for a venture fund] is right.”
The fund, which hopes to eventually bring on a third partner in the semiconductor equipment area, features a standard 2.5% management fee and an 80%/20% carried interest split.