The Ohio Capital Fund has committed an undisclosed amount to four venture firms, a move it hopes will stimulate seed and early stage investment in the Buckeye State.
The $125 million fund was created with money collected through debt instruments offered accredited lenders at the beginning of 2005. The government of Ohio will offer tax credits to the lenders if the principal is not returned. The fund has raised $58 million to date.
The fund’s administrators, Fort Washington Investment Advisors and Peppertree Partners, have tapped Draper Triangle Ohio Ventures, Columbia Capital IV, Reservoir Partners II and Globespan Capital Partners V.
The statutes that created the Ohio Capital Fund dictate that 75% of its assets must be invested in venture firms based in Ohio.
Toward that end, Draper Triangle Ventures, based in Pittsburgh, has opened a parallel fund and hired a new partner that will invest out of Ohio. Draper Triangle Ohio will invest side-by-side with Draper Triangle Ventures II, a 2001 vintage fund that had returned a negative 23% IRR at the end of 2005, according to data released by the Ohio Bureau of Workers’ Compensation (Ohio BWC).
Reservoir Venture Partners, which held the first close on its new fund after taking the Ohio Capital Fund’s commitment, did not perform welll with its most recent fund. It returned a negative 22.3% IRR at the end of 2005, according to data released by the Bureau of Workers’ Comp.
But the initial negative results have not deterred Fort Washington’s Steve Baker, the vice president of equity capital responsible for the Ohio Capital fund. “Interim valuations are not necessarily indicative of how well a fund will ultimately perform,” he says.
Ohio became the center of a private equity snafu at the end of last year when OBWC’s announcement in December that it would disclose the performance of 68 venture capital and private equity funds (including ABRY Partners, The Carlyle Group and others). The performance numbers were calculated by Ennis Knupp & Associates, a Chicago-based firm hired in June 2005 to audit the OBWC’s $15.7 billion securities portfolio after the discovery of missing money in bureau investments with a Toledo rare-coin dealer, a controversy dubbed “Coingate.”— Alexander Haislip