Venture capital firm looking for few good CEOs

BROOMFIELD — BV-Cornerstone Ventures LP is looking for talent- and experience-laden top executives who will put their money where their minds are and invest in their fields of expertise.

“We go out in the marketplace (networking) and seek out proven executives. They may be former entrepreneurs or executives with large corporations — senior executives who for some reason or another aren’t currently engaged,´ said Neville Vere Nicoll, a managing director of the $100 million venture capital fund. “The thing that is critically important to us is that they have proven domain (market sector) experience & and they are willing to invest some amount of money that is meaningful to them in the transaction.”

Vere Nicoll said his fund wants co-investors who not only can help pick out winners, but also help mold the operations of the mid-stage companies Broomfield-based BV-Cornerstone is likely to fund. The expert co-investors currently working with the fund, he said, have a variety of continued interests in the operations of the companies they helped select.

“Some end up as CEOs, and some don’t,” Vere Nicoll said. “It not like the entrepreneur programs at some funds, which are sometimes more like ‘CEOs-in-waiting’ programs.”

Currently, the firm has about 35 percent of its fund invested, mostly in entrepreneurial companies that had already grown to about $10 million in annual revenues. BV-Cornerstone seeks funding opportunities across the nation and lists STI Knowledge Inc., Speakeasy.net, SageCircle, The Petroleum Place Inc., httprint and Tachyon Inc. as currently funded companies.

“We target likely companies; sometimes they might not be all that active in seeking capital, but when they hear that we have the capital source, as well as the domain expert, a lot of these companies are very happy to hear from us,” Vere Nicoll said.

Once co-investors have helped determine a viable market sector, company analysts go to work evaluating companies within that sector that might be suitable candidates for funding.

“We don’t anticipate working with more than 20 (co-investors). There are some already who we work with, literally, on a day-to-day basis,” Vere Nicoll said.

BV-Cornerstone utilized the federal Small Business Investment Companies program, administered by the Small Business Administration, to leverage about $33 million in private investment, at a maximum 2 to 1 ratio, into the $100 million fund. The fund came into being about the same time as the dot-com bubble burst, Vere Nicoll said, which had a significant impact in the funding philosophy.

“The strategy has evolved over the two years (the fund has been in existence). It’s not something that came in a flash,” he said. “But we knew that we were better at companies that already had operations. There’s a huge dividing line between companies that are already profitable and those that are not.

“We’ve gone very slowly since the bubble burst; we knew the whole environment was changing,” he said. “The majority of investors were private individuals, and we had to be careful about protecting their investments.”

BV-Cornerstone came into being through cooperation of investors from a Colorado-based fund, Cornerstone Equities LLC, and BV Group Ventures LLC. BV Group Ventures, of Maryland, is largely involved in later-stage opportunities in information technology and communications infrastructure companies.

Cornerstone’s Managing Director Tom McCloskey has long-time involvement with Palmer Broadcasting and Palmer Communications, helping turn the focus of the companies from radio and television to wireless systems. McCloskey also has been involved with Horizon Organic Holding Corp. (Nasdaq: HCOW) since the company’s early stages, and currently serves as chairman of the Horizon board and as chairman or director of eight other companies.

Vere Nicoll started his career in venture capital as a founding partner of Beaverbrook Group in the United Kingdom. The firm primarily was involved in health-care companies in the United States and Europe. He also has served as president and chief executive of Soricon Corp., a manufacturer of advanced document readers, and Kryptonics, a leading sporting goods manufacturer.

BV-Cornerstone investments largely have remained in the technology sector, including httprint, which helps corporate clients manage print production and spending, and Speakeasy, one of the nation’s largest privately held broadband service providers specializing in digital subscriber lines. Tachyon Inc. is a leading provider of broadband satellite infrastructure and services designed to augment and extend terrestrial enterprise networks.

However, BV-Cornerstone has extended outside of pure technology: One investment, The Petroleum Place, utilizes a Web-based approach to facilitate and streamline the marketing of global oil and gas assets. SageCircle’s expertise and software enables information technology vendors to increase sales through effective industry analyst relations.

“We’re not totally in the technology arena, but we’re always close to the technology arena,” Vere Nicoll said.