Raising, managing, investing and harvesting a venture capital portfolio is a massive commitment. Average time to liquidity for venture-backed companies is now approaching eight years and we’re aware of many firms that are extending legacy funds well past their ten-year limited partnership lifetimes. We’re seeing this in our first Fund, which is approaching ten years old and still has three healthy and growing portfolio companies remaining. These conditions are contributing to larger-than-ever active portfolios in early-stage venture capital firms. Early-stage investing is a hands-on business that demands a good deal of time and care devoted to each portfolio company. The venture business on the other hand, demands successive funds be raised to keep a firm “in the game” as it relates to quality deal flow and reputation. This creates a tension between growth and bandwidth as a firm progresses.
It is with this notion that we’ve decided to not raise a third fund. We have over twenty companies to manage in our current portfolios and will possibly make one more new investment. The idea of raising a third fund right now (despite genuine interest from both new and existing investors) is hard to imagine given the plate of work our partners have in front of us to create the most value we can in Fund I & Fund II. We are extremely optimistic about our portfolio of companies and believe that they will drive very handsome returns for our investors. Our focus right now is doing the most we can to make that happen.
All of us will continue to be very active in working closely with the RMVCA, the ITC, Idaho Universities and other organizations to support the startup community both locally and in the region, something we’re all very passionate about. Mostly though, we’ll be spending our time working more closely than ever with our existing portfolio companies so that we can maximize returns for our limited partners.
Words cannot describe the gratitude we feel for everyone who has supported Highway 12 Ventures during the last decade. We look forward to continuing to work with the stakeholders in the Rocky Mountain region and Idaho in particular to support all the entrepreneurs in our startup communities.