Venture Capital

Two small Baltimore-based venture capital funds have merged, resulting in an organization with more economic power to help transfer university research from the laboratory to the marketplace.Triad Investors Corp. and Zero Stage Capital will now operate as one fund with a combined pool of $10.25 million.Barbara Plantholt, a general partner of Zero Stage, has joined Triad as its president and chief executive officer.After two years of trying to raise capital for a new company aimed at marketing researchers' ideas, Johns Hopkins University and the Johns Hopkins Health System announced earlier this year it had gotten three corporations to invest $2.25 million in Triad.

Clyde Heintzelman and Allen Shatto are both looking for venture capital to feed their growing companies. But the way they look at the venture market -- and the way the people who provide seed money critical to young firms look at them -- could hardly be more different.Mr. Heintzelman, chief operating officer of the Beltsville-based Internet access provider Digital Express Group Inc., is sitting pretty. His company raised $5 million of venture money in March, and its backers are ready to pour in more.

While U.S. venture capital investment in overseas companies has been rising for the past several years, the predicted rush to forsake American entrepreneurs for those abroad has yet to happen, according to a survey released yesterday. The results suggest that investors still have faith in domestic innovation and that the so-called "brain drain" of talent leaving the United States for less regulated countries may not be as strong as thought. "U.S.-based [venture capitalists] are essentially dabbling in global markets," said Mark Jensen, a managing partner with financial firm Deloitte & Touche LLP. His organization, along with the National Venture Capital Association, of Arlington, Va., surveyed 528 venture capitalists on several continents to gauge their global investment activity, hoping to assess which regions are considered hotbeds of innovation.

Maryland high-technology companies wrapped up their pitches for venture funding yesterday at the Mid-Atlantic Venture Forum in Tysons Corner, Va.The annual forum this year focused on companies engaged in providing services or products tied to the Internet, telecommunications or computer software.A total of 31 companies, most from the Northern Virginia area, were invited this year to make detailed presentations to venture capital executives.Following last year's forum, seven companies, including three from Maryland, landed commitments of venture funding ranging from $1 million to $20 million.

E.magination Network LLC, a Baltimore Internet firm, said yesterday that it sold controlling interest to a Maryland venture capital company as part of an effort to grow during the technology downturn. Financial terms of the deal were not disclosed. "I think this company in particular has done a really good job of growing its market share and maintaining its revenue in really tough times," said Daniel J. Roche, chairman of the Severna Park investment firm Roche Capital LLC, which invested in e.magination.

Venture capitalists pumped more than $116 million into Maryland companies in the third quarter - a gain of 46 percent over the second quarter even as funding levels slipped nationwide - with increased investments in state-based biotechnology, medical device and health care services firms leading the advance, according to a report released yesterday. Nationally, venture-capital investments totaled $5.26 billion in 714 companies during the third quarter - a drop from the $6.07 billion invested in 780 companies during the second quarter, according to the MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

What's the difference between Crop Genetics International of Hanover and Nova Pharmaceutical Corp. of Baltimore? About four months.And about $50 million.Crop Genetics raised about $27 million in a public offering of preferred stock in July; in November, the stock market having been rocked by Iraq's invasion of Kuwait in August, Nova had to cancel its own planned $25 million offering of preferred stock because investors weren't biting.Biotechnology companies are being squeezed again, as investor skittishness over the prospects for war in the Middle East and recession at home help turn the screws on the young, capital-intensive industry.

Peter Bepler and Matt Voorhees started their tech company the dot-com way: over a keg of beer in a parking lot during alumni weekend at Kenyon College. But when it came time to expand the business, the pair needed more seasoned executives. "We saw that this company had tremendous potential, and we needed to bring in experienced and proven leadership to fill that potential," said Bepler. Enter Chief Executive Officer Dennis Hooks and Vice President of Sales Bart Hawe. With years of experience in the business world, Hooks and Hawe had just the know-how that Bepler, 28, and Voorhees, 30, needed for their 2-year-old Rockville-based online accounts payable outsourcing company, Anybill Financial Services Inc. Experience was a prevailing theme yesterday at the Mid-Atlantic Venture Association's Capital Connection 2003, where start-ups seeking investments showcase their businesses for venture capitalists.

Ruxton Pharmaceuticals, a local bioscience start-up focusing chiefly on finding a treatment for Lou Gehrig's disease, has secured $5.2 million in a first round of private funding, including $1.7 million from venture capital giant New Enterprise Associates, Ruxton and NEA announced yesterday. At a time when the Baltimore region is working to build up its biotech sector, executives say yesterday's deal underscore's the area's bioscience strengths: Ruxton will be locally based and has licensed technology developed by a prominent Johns Hopkins researcher, while the Menlo Park, Calif.

The memory is vividly stamped into Frank Adams' brain.He was running his own company and desperately needed his venture capital firm to help him wriggle out of a tight financial situation. At stake was his ability to make payroll, not to mention the existence of his business. Mr. Adams huddled with his financial backers and informed them of how he planned to alleviate his problems, as well as the consequences of not doing so."They were strict, academic types," Mr. Adams said. "To very specific questions, they were giving me dissertations on market theory, oligarchies.