Fund's 'adventure' is almost over
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When the 190 or so investors in the Western Pennsylvania Adventure Capital Fund gather next month for their annual meeting, they'll be asked to pull the plug on the fund's efforts to provide early-stage money to startup businesses.
After raising $5.2 million from 1999 through 2001, the Scott fund has made no investments since 2007, and its portfolio has been reduced to a half dozen Western Pennsylvania companies valued at $942,444.
Based on the estimated $40,000 it will cost to liquidate the fund, investors are expected to get about 21 cents for each of the fund units they own.
According to a proxy statement sent to investors in advance of the May 17 meeting, if the fund "continues to function in its current capacity, it will be rendered insolvent and have no ability to pay its current obligations within the next year."
The proxy statement said the fund's largest investor is PNC Financial Services Group. The Pittsburgh bank's PNC Venture arm owned 7.9 percent and doubled its stake when it acquired National City, which also had invested in the fund.
G. Richard Patton, the University of Pittsburgh business school professor who serves as the fund's president and CEO, said its success was not reflected in the numbers, which show the fund turned a profit in two of the last 10 years and has not posted a profitable year since 2004.
Last year, the fund lost nearly $410,000 on the sale of its investment in Akustica. The South Side company, which makes microphone chips for laptops and cell phones, was acquired by Robert Bosch of Germany. Fund investors lost another $140,000 with the sale of their stake in WorldDealer, an Internet marketing company.
Dr. Patton says when it comes to venture capital, you can do everything right and still not produce competitive returns. That's true even in the best of times. But as investors in the theoretically less risky world of major stock market indexes can attest, the worst of times is a more appropriate description of the last decade.
First Published April 25, 2010 12:00 am
