$675 million revs up Ignition

Ignition Partners, a Bellevue-based venture-capital firm, said Monday it has raised $675 million in fresh capital to invest in not only early-stage companies, but in profitable ones, too.

Ignition said the money will go toward two different strategies: $400 million will be set aside for traditional venture-capital investments in early-stage technology companies; and $275 million will be earmarked for profitable, more mature companies.

The approach is similar to what Ignition tested in its third fund, which totaled about $400 million. That fund included about $80 million aimed at supporting acquisitions by some of its portfolio companies.

With the larger fund, Ignition hopes to expand later-stage investments to companies they may not have invested in previously, said Ignition Partner Jon Anderson.

"We are in the fortunate position of being in the Northwest, where there are a lot of other companies to invest in that aren't necessary Ignition venture investments," he said.

John Taylor, an executive at the National Venture Capital Association, said the concept of two funds — one for early stage and one for later stage — goes along with national trends.

"There's no question that a lot of funds that have historically focused on early stage are now looking at having the option of things that are more mature," he said.

Taylor cited two reasons: Investors are eager to give good venture firms more capital, and if investors have expertise in a specific industry or geography, it may apply as much to mature companies as startups.

Anderson said that is the case with Ignition. Previously, it spurned financing for more mature companies because it focused only on young ones.

Ignition has $1.7 billion under management, including $200 million managed by QiMing Venture Partners, a fund for investments in China.

Ignition is one of the largest venture-capital firms in the Northwest. Seattle's Frazier Healthcare's most recent fund totals $475 million; Polaris Venture Partners, with offices in Seattle and Waltham, Mass., has a $1 billion fund; and Kirkland's OVP Venture Partners latest is at $250 million.

Ignition, started by a cadre of former executives from Microsoft and the wireless industry, secured its first fund — $135 million — in 2000, when venture capital had reached an all-time high. Even with the subsequent economic downturn, Ignition raised a $285 million fund in 2001. The third fund came in 2004.

Ignition said Monday that 90 percent of the capital in the new funds came from previous investors.

In its announcement, Ignition released a few financial details about its investments.

Of its more than 50 currently active investments, two-thirds are based in the Northwest; they will have combined revenues of more than $600 million this year, 50 percent higher than last year.

Companies Ignition has sold include Avogadro, UIEvolution, Consera, Wildseed, Intelligent Results and XenSource.

Dan Rosen, chairman of the Alliance of Angels and an adviser to startup technology companies, said the Ignition announcement is important because it's necessary in an entrepreneurial community to have investment funds that can support everything, from one person in a garage to a mature company with employees.

"It's really a critical step, as more and more venture funds go later in the cycle, companies need people willing to invest at all stages," Rosen said.

"Ignition is showing great wisdom in making this step toward being able to keep step with companies from inception to exit."

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com