Barbara Plantholt, president of Zero Stage Capital Maryland Limited Partnership, readily admits her venture capital fund was unable to raise the amount of money she'd hoped. But she's not alone.
Triad Investors Corp., funded partly through various Johns Hopkins institutions, also came up about 50 percent short of its fund-raising goals.
So the two announced yesterday that they have merged, with Triad becoming the general partner of Zero Stage, and Ms. Plantholt president of both. Leigh R. Abts, president of Triad since it started to seek out investors several years ago, is now executive vice president and chief operating officer of Triad.
Together the two Baltimore funds have $10.25 million to invest in promising regional technologies and companies. Ms. Plantholt told reporters yesterday that the combined entity will be more than the sum of its bank accounts and better able to bring promising ideas out of the laboratory and into the marketplace.
"Neither fund, at $5 million, was economically viable," she said. "By merging, you realize some economies that then make a $10 million fund more economically viable."
The merger was legally completed in May, but it wasn't until this month that the two funds have started to work together, Ms. Plantholt said.
For instance, Triad was established by officers of the Dome Corp., the for-profit development subsidiary of the Johns Hopkins University. Its goal was to find potentially marketable ideas within the university and help faculty members develop them to the point where a "seed" venture capital company might be interested in funding the next stage.
"But with no seed money available, even though Triad might have done a bang-up job, they had nowhere to go from there," Ms. Plantholt said. Seed is the most under-funded sector of the risk capital industry, she explained.
And that's where Zero Stage can come in, she pointed out. While the money from the two funds won't be commingled, Ms. Plantholt said that she expects Zero Stage will end up funding many projects that Triad helps initiate. "My belief is that there will be a significant overlap," she said.
Despite the different investment goals of the two funds, some of their investors are cut from the same mold. Triad is funded by the Whiting-Turner Contracting Co., a Baltimore Gas and Electric Co. subsidiary, the Johns Hopkins Health System and the Johns Hopkins University, in addition to 3i Ventures Corp. of Boston.
Zero Stage, which Ms. Plantholt joined in 1988, counts among its board of directors such Baltimore stalwarts as Crown Central Petroleum Corp., the First National Bank of Maryland, the Monumental Life Insurance Co., the Abell Foundation and the Meyerhoff Foundation, among others, as well as outsider Virginia Polytechnic Institute.
Ms. Plantholt acknowledged that many of those investors participated as much out of a sense of civic and corporate responsibility as from a desire for superior investment returns.