Banyan Ventures scraps Idaho venture capital fund plan

A Salt Lake City private equity firm has decided to scrap plans to develop an Idaho-only venture capital fund.

Banyan Ventures had mentioned its plans for such a fund in April at the Idaho Technology Council’s (ITC) Capital Conference, and operating partner Scott Jorgensen had discussed it in November. “We would like to raise a fund here with Idaho investors,” he said then. “We target high net worth investors in Utah who make capital commitments, turn around, and invest that in Utah companies. We’d like to do the same thing in Idaho: Identify high net worth investors and raise a small fund of committed capital.”

Banyan even rented office space in Boise. But in August, the firm’s plans abruptly changed.

“They decided to regroup and focus on the Utah market,” said Jay Larsen, CEO of the ITC, said August 24. “Scott and I had a meeting about three weeks ago, and he was informed they wouldn’t continue their expansion in Idaho. It was surprising, because we had some very engaging meetings with some very strong potential Idaho investors over the last couple of months.”

While the principal investors and managers would still have come from Utah, it would have been an Idaho-only fund, Larsen said. “It’s disappointing from an ITC standpoint because we had worked with them to grow a fund that would be exclusive to Idaho,” he said. “I still think there’s a good opportunity for a fund to be developed in Idaho, funded by Idaho investors, and deployed from Idaho.”

A number of Utah venture capital companies are already investing in Idaho companies, such as EPIC Ventures, which has invested $5.5 million in AppDetex, and Sorensen Capital, which has invested $48 million in Cradlepoint, he said.

Idaho hasn’t had a venture capital fund since Highway 12, which shut down in 2011. The Boise Angel Alliance, an organization intended to help fund early-stage startups in Idaho, has retooled its investment fund to support larger projects, and is launching Boise Angel Fund V, which has targeted capitalization of $3-5 million — triple the size of previous funds.

And that may have been part of the problem with Banyan’s Idaho venture, said Rick Ritter, formerly CEO of the Watercooler and now lab director of New Ventures Lab, in Meridian. Ritter said he had one meeting with Jorgensen in the spring. “They’ve tied up a lot of the pocket change in the Treasure Valley,” he said. “I told him, ‘Good luck, but I think you’ll have a tough time raising the funds.'” Idaho investors may also have been leery about the company taking funds out of Idaho, he added.

Banyan Ventures staff did not respond to inquiries.