Click here for Part I

One of the founding fathers of the Mid-Atlantic’s venture capital industry

Charles (Chuck) W. Newhall III is one of the founders, along with Frank Adams, of the Mid-Atlantic Venture Capital Association. With headquarters in Virginia and DC, MAVA is an organization that represents the interests of the regional investor and private equity community, and which formed a blueprint for similar associations elsewhere. Chuck is also co-founder of New Enterprise Associates, the world’s largest venture capital firm in terms of assets under management, and one of the oldest VC firms in the US. Throughout his long and storied career, Newhall has played an integral role in building the VC industry, with a focus on emerging companies and paradigm shifts in the Mid-Atlantic region. He remains an active investor and advisor, and currently serves as Chair of Greenspring Associates’ Industry Advisory Board.

Chuck Newhall spoke with citybizlist publisher Edwin Warfield for this interview.

EDWIN WARFIELD: What challenges did you have to overcome in establishing one of the largest venture capital firms in the US at a time when there were only a few?

CHUCK NEWHALL: During the time in which we were growing from basically nowhere to 20–25% of the venture capital industry in the country, you have to remember that many corporate headquarters were leaving the Baltimore–Washington corridor, as were the big banks. We were really fighting an economic trend that looked hostile at first, but was not for us. You know, the region has become increasingly dependent on government funding. A lot of our companies in the Mid-Atlantic derive their money from government contracts. But in the Baltimore–Washington corridor, in Philadelphia and Virginia, we had a whole group of companies come up.

Between 1989 and 1992, there were 40 IPOs. Forty percent of those were medical and technology. By the mid-1990s, those numbers had reversed, and medical investing became out of fashion in the venture capital industry, and the dollars flowing into it declined rapidly.

Q. Tell us about the chart in your office. It reads “West Coast Venture Capital.”

A. So, how do you create a spawning ground for companies, and a spawning ground for venture capital firms? [Chuck raises a bayonet and points it at a chart.] Excuse me for having me use my bayonet as a pointer, but it’s the only thing I had in my office that was available. [The camera scrolls through a timeline.] This is the Western Venture Capital Association—25 years, starting in 1958 and going into 1993. And you go back to three or four firms, like the allied capital and data science ventures in our region, except these were McMicking and Company; Draper, Gaither & Anderson; and a few others. Basically, this is a chart that shows when the venture capital firm was started, and then what other venture capital firms came out of it.

Bessemer Venture Partners actually started with Edward Heller in 1958 on the West Coast. And this goes on: you can see Arthur Rock, who’s a very famous venture capitalist, and Dick Kramlich came out of Arthur Rock, so you can say NEA.

I call them the “begats,” like in the Bible—Abraham begat so and so, so and so begat so and so. And so, what you do is you put together a chart, which shows the starting of the venture firms, what other venture firms came out of them, and then some of the companies that came out of them.

That’s what we tried to do in the Mid-Atlantic. Now, it was amazing—in the Mid-Atlantic, there was absolutely no coverage for anything entrepreneurial. When the Sun papers covered the founding of NEA, the reporter was practically crying because he had to be with us rather that focusing on the closing down of the Bethlehem Steel facilities. He said: “What you’re going to do in this region doesn’t count economically.” But what Warfield’s, which was the predecessor to citybizlist, did for us was to provide us a platform from which to speak to the nation. And speak to the nation we did indeed do.

Edwin Warfield, CEO of citybizlist, conducts the CEO Interviews.

If you're interested in reaching CEOs, please contact edwin.warfield@citybuzz.co

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