Douglas MacArthur

I often take a line from General Douglas MacArthur when describing what happens to venture capital firms at the end of their life cycles. They never really die, they just kind of fade away.

We're seeing that this week with news that Frazier Technology Ventures -- a well known venture firm in the Seattle over the past decade -- has made its last new investment and plans to wind down operations over the next few years. The timing of the announcement comes amid radical upheaval in the venture business, with some predicting an even bigger shakeout as returns slump and cash from college endowments and pension funds dries up.

For as much as Seattle's venture capital landscape has grown over the past 15 years, it is still relatively small compared to Boston or the Bay Area. There are only a handful of active venture firms here, something that Vulcan Capital's Steve Hall addressed at a panel yesterday in which he said Seattle needs one or two more players. The way the industry is headed, it doesn't look like that will be happening anytime soon.

But, based on my recent analysis of those firms still operating in Seattle, things aren't quite as bad as they seem.

Some TechFlash readers have suggested that other Seattle firms may be on their last breath. But is that really the case? I decided to take a look at six of the major VC firms in the region with funds of $100 million or more, providing a scorecard of sorts where each one stands. I think you will see that there's plenty of money still in the bank. In fact, one could argue there's never been so much capital available to startups in this region.

Frazier Healthcare Ventures: Founded in 1991, Alan Frazier's $1.8 billion healthcare and life sciences fund is still a powerhouse in the industry. It is currently investing out of a $600 million fund, raised in 2008. Plenty of capital there to invest, though Frazier -- the forerunner to Frazier Technology Ventures -- focuses nationally on its investments so by no means will all of that money flow into Northwest startups.

Ignition Partners: The Bellevue venture capital firm raised a $400 million early-stage venture fund and a $275 million growth fund in October 2007, bringing total capital under management to more than $1.5 billion. It then followed that up with $320 million last year for its Chinese venture arm: Qiming Venture Partners. Ignition -- founded by former Microsoft and McCaw Cellular executives -- scored a big win with the sale of XenSource in 2007. But it is still seeking an IPO from one of its portfolio companies, and has also been plagued with some high-profile blow ups in recent years such as Entellium and Blowtorch Entertainment. Nonetheless, Ignition should have plenty of "dry powder" from which to invest given its success in raising capital.

Madrona Venture Group: Like Maveron, Madrona couldn't have timed its fundraising efforts any better. It pulled in $250 million in the summer of 2008, the biggest fund yet in the Seattle firm's history. It now has $675 million under management. Madrona has had some success in recent years, with the sale of companies such as Farecast, World Wide Packets and ShareBuilder, as well as the IPO of Isilon Systems. The 14-year-old firm also has been adding some key talent, naming former aQuantive CEO Brian McAndrews this past summer and, earlier this week, former RealNetworks executive Len Jordan to the team.

Maveron: Founded by Starbucks chairman Howard Schultz and venture capitalist Dan Levitan, Maveron had the very good fortune to close a $240 million venture fund in the Spring of last year just months before the financial crisis hit. The 11-year-old consumer-focused firm -- which has bankrolled companies such as Capella University, Pinkberry and Trupanion-- now has $840 million under management. And since venture funds typically have a 10-year life cycle, Maveron certainly has enough cash to weather the storm. It's biggest success to date remains one of its earliest investments: eBay.

OVP Venture Partners: The granddaddy of Seattle's venture capital scene, OVP raised its seventh fund in early 2007. The $250 million fund was the biggest to date for the Kirkland firm, and as of this fall it was 50 percent invested. That means OVP still has money in the bank to invest, and it actually has been quite active in recent months with new deals. Earlier this year, the firm said it wouldn't need to go out for a new fund until 2011. But the lack of IPOs is having an impact on OVP just like on everyone else. "There is absolutely no public market and there hasn't been for venture-backed companies since 1999," Waite pointed out grimly earlier this year.

Voyager Capital: The Seattle firm raised $110 million in 2006, and still has about half of that money left to invest. It too has been adding some key talent in recent months, notably former Adobe CEO Bruce Chizen and Seattle super angel Geoff Entress. Voyager had two notable exits last year: CapitalStream and Attenex. But it has been some time since Voyager has seen a big whopper exit along the lines of aQuantive or Tegic Communications, so Chizen, Entress and the rest of the team certainly will be on the prowl to produce that deal. That's especially the case since it appears from this list that it has the oldest fund of the bunch.

There are a number of other firms that operate or have offices here, including Arch Venture Partners and Polaris Venture Partners. I didn't include them in the list since they technically have their main offices back east. I also didn't include some of the bigger angel-style funds which are operated by individuals or teams of individuals, such as Ackerley Partners, Benaroya Capital, Cedar Grove, Second Avenue Partners, Trilogy and Vulcan Capital.

My conclusions from all of this? The Seattle venture capital landscape actually is not in too bad of shape when it comes to fundraising needs. Now, the big question of actually making solid returns on that money, is a story for another day.

[Douglas MacArthur photo via Wikimedia]