Betting on others, triumphing himself Newhall being honored as venture capitalist

September 28, 1997|By Mark Guidera | Mark Guidera,SUN STAFF

Emerging from the University of Pennsylvania in the heady late 1960s, Charles W. "Chuck" Newhall III briefly fancied himself the next Ernest Hemingway.

To jump-start the fire and romance of a literary career, Newhall enlisted in the U.S. Army where he received the Silver Star, Purple Heart and other awards for his service in the Vietnam War. But in short order he found his writing skills to be, well, unremarkable.

Suddenly, his father's career as a professional investor -- a successful one at that -- in start-up businesses didn't look so bad. After all, he had made his own mark on history, financially backing ventures in what is now the commercial rocket industry.

Today, the 52-year-old Newhall is regarded as arguably one of the most skillful and successful venture capitalists in the mid-Atlantic region, if not the nation.

The Harvard MBA (1971) has honed an acumen for placing money not so much on sure business winners, but on managers who, as he terms it, "can do the broken, open-field running" so critical to successfully launching and operating new business ventures in ferociously competitive environments.

New Enterprise Associates, the Baltimore-based venture capital outfit that Newhall co-founded in 1978, has backed more than 300 start-up companies with more than $700 million in investments. More than 100 have gone public. In more than a few cases, New-hall and his partners at NEA have recruited top talent to take the helm of a venture they've created and believe has legs.

Tomorrow evening, the Greater Baltimore Committee, the regional business round-table group, will honor Newhall for his enduring role in shaping Maryland's exploding high-technology sector.

The GBC will bestow on Newhall its Baltimore's Extraordinary Technology Advocate, or BETA, award at its annual high-technology night. The well-attended event showcases a diverse array of regional high-technology companies and their accomplishments.

Ever the gentleman, Newhall sees the award as shared by his NEA co-founders, C. Richard Kramlich and Frank Bonsal.

The award also is recognition, says Newhall, of the venture capital industry's vital role in helping the region's economy lumber out of its post-industrial doldrums during the 1970s.

It was venture capital, he says, that backed a number of information technology and other high-tech start-ups in the region to help it emerge as a leading player in the high-technology, life science and health care revolutions.

"This is really a recognition that venture capital has been a driver of change in the economy," says Newhall. "Entrepreneurs create the companies that cause change. Venture capitalists finance that change."

The former vice president of T. Rowe Price's New Horizons Fund (1974-1977) has been particularly skillful in finding and backing health care and medical technology ventures.

Newhall and NEA have found rich mining in the Maryland-D.C.-Virginia region.

Among the recent local ventures Newhall and NEA have backed are Elder Health Inc., among the nation's first efforts to provide managed care for elderly Medicaid recipients, and Pioneer EyeCare, which is bringing the managed-care concept to eye specialists.

The list of now publicly held ventures that Newhall and NEA have championed in this region includes Integrated Health Services in Owings Mills and Genetic Therapy Inc. in Gaithersburg.

Some, such as Integrated Health (market cap $853 million), a manager of sub-acute care and rehabilitation centers nationwide, are having a lasting impact on how medical care is structured, priced and delivered.

Others, such as Gaithersburg-based Genetic Therapy, which was bought by Sandoz Pharmaceuticals in 1995 for $295 million and is developing gene-therapy treatments for cystic fibrosis and brain cancer, are pioneering new ground that could one day dramatically alter medicine.

While he is bullish about Baltimore's and Maryland's prospects for yet more start-ups to lead high-technology growth, Newhall believes that business leaders and elected officials need to start looking at high-technology business development as a broader, regional (Northern Virginia to New Jersey) phenomenon.

Were Newhall asked to draft a business plan for attracting new high-tech-oriented firms to the region and stimulating creation of start-ups, it would include dumping the state's high-tech incubator program and creating a round table or "GBC clone" of executives from the 40 or 50 most promising and fastest growing information-technology, medical technology, biotechnology and other high-tech outfits. Business and economic development leaders would then focus on interacting personally with the group often to ensure they are getting what they need and above all that their companies stay in the region, says Newhall.

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