Nevada Ventures, the Reno-based company that's the biggest independent venture capital fund in the state, will temporarily delay raising money for its second fund.
"With war under way and economic uncertainty, we decided to delay launching a new fund," said Robb Smith, a general partner in Nevada Ventures.
Instead of raising money for a new fund, Smith said the company will focus on the six companies in its current portfolio.
That portfolio includes Nevada's fastest-growing technology company, Alere Medical.
Nevada Ventures' first fund has invested $22 million in young companies and expects to announce another $2 million investment shortly.
The first fund focuses on telecommunications, software and life sciences.
Companies in which the fund has invested, Smith said, this year will generate more than $30 million in revenues, a figure that Nevada Ventures expects to grow to $100 million in the next two years.
The fund's effort to raise money for its second fund were just a few months old when Nevada Ventures leadership decided the timing was wrong.
Smith said that Nevada Ventures will use the breathing spell to work with state officials to develop a Nevada-based capital market, which he called a "vital ingredient" to the state's economic development efforts.
Smith said the involvement of big institutional money such as pension funds is particularly important to creation of a thriving venture capital industry in Nevada.
The company's decision to put its second fund on the back burner comes at a time when venture capital firms nationwide have struggled.
Venture Economics reported that only $1.9 billion was raised by venture capital firms in 2002.
More than 20 times more money $40.7 million was raised by venture capitalists just a year earlier.
Equally difficult, the valuation of venture capital firms' portfolios and distributions averaged only 67 cents for each dollar invested in 1999, Venture Economics reported.
"The venture capital market nationwide has taken a serious hit over the past three years," said Michael Fagen, a general partner in Nevada Ventures.
He said that Nevada Ventures has seen improvements in entrepreneurial talent in the state, and also is heartened by improving flow of proposed deals.
"As the fastest-growing state in the nation, Nevada will be well-positioned to diversify economically once the national economic cycle begins to improve," Fagen said.
He said Nevada Ventures' first fund is positioned to out-perform its peers.
The fund was known as Millennium Three Venture Group before changing its name in late 2001 to better reflect its geographic focus.
