Again, On their Own: Highway 12 Ventures to Disband, Aims for the Black

Highway 12 Ventures took the VC scene by surprise yesterday when the firm announced that, after two funds, it would not seek a third vehicle and will wind down its operations.

Mark Solon, a managing director with the firm, posted a blog item at the VC’s website, in which he said that thanks to Highway 12’s growing responsibilities between existing assets—the VC manages more than 20 companies and may invest still—the VC will concentrate on early-stage investments’ operations and returns before it shutters the fund without seeking a third vehicle.

Highway 12 Ventures’ first attempt—barring any last-second successes from its remaining portfolio—was a disappointment. According to 2009 return data from the Public Retirement System of Idaho, which has invested in both Highway 12’s funds, IRR from its first, 2001 vintage fund was about -13 percent.

Still, limited partners might be buoyed by Solon’s optimism. When reached by peHUB, Solon said: “We feel we’ll be in the black [when the first fund’s life has completed], maybe even make a few pennies.”

“We made our share of mistakes,” he later added.

Remaining investments from Highway 12’s first fund include OpenLogic, the IT services, support and software company; DAZ Productions, a 3D software and design company; and VICO Software.

Solon is much more optimistic for Fund II’s results, which he predicted would be “a tremendous performer.” Among that fund’s assets are small business lender Lendio, market research provider GutCheck, and marketing company Balihoo, among others.

The VC’s second fund, a $75 million fund with a 2006 vintage, is not off to an impressive start, however, according to LP data. Highway 12 Ventures Fund II, according to data maintained by the Montana Board of Investments and dated 2010, one of its LPs, has generated an IRR of -12 percent, and an investment multiple of 0.77.

Solon said that he, and other Highway 12 Ventures employees, do not have plans to leave immediately and will focus on monetizing existing assets.