Venture capital continues to flow along the mid-Atlantic coast, as the economy swells and investors infuse dozens of infant and toddler companies with money and energy.
Both Maryland and Virginia booked healthy increases in venture-capital placements during the first half of this year, according to a new survey by Coopers & Lybrand, an accounting and consulting firm.
In Maryland, venture capitalists invested $59 million in 14 companies, up from $47 million and 12 companies during the first half of 1996. For Virginia, venture capital deals grew from 19 to 29, and invested funds expanded from $80 million to $110 million.
"We are very, very busy," said Stuart Frankel, managing director of Grotech Capital Group, a Timonium venture firm that is preparing to launch a $250 million fund next year, its biggest yet. "The deal flow here is just incredible. We've been able to attract really great capital worldwide."
With an eye to eventually selling out to public stock markets or other buyers, venture pros invest in small, often high-tech, companies with huge growth potential.
Analysts credit this year's continuing surge in venture deals to a booming stock market, a long menu of promising technology and a teeming entrepreneurial class populated partly by managers leaving big companies in recent years.
"We're seeing, I think, a cultural shift in multiple regions throughout the country," said Peter Barris, general partner with New Enterprise Associates, an important, Baltimore-based venture firm.
"Small-company, entrepreneurial environments are becoming desirable places to work," he said.
"We've seen major corporate executives make the leap from their secure, heavily perked environments to entrepreneurial environments where you're betting on the come, but the payoff can be substantial."
The soaring stock market has impelled venture deals from two directions. Rich returns harvested by venture pros cashing out to public stock investors have excited interest from people who before hadn't gone into venture deals. At the same time, high stock values have helped top off the country's general supply of capital.
Calif., Mass. lead
"You might find a state pension fund that wasn't really a player in venture capital saying, 'You know, we really ought to put 3 percent of our assets in venture capital,' " Barris said.
