Venture Capital Forced to Perform Triage
OAKLAND, Calif. -- Claremont Creek Ventures recently had to decide which of its young to forsake.</br></br>The venture-capital firm had invested in such companies as online travel site cFares Inc. and genetic-technology start-up Gene Security Network Inc., with cash from a $130 million venture fund it launched in 2005.</br></br>Amid the financial crisis and the plunging stock market, Claremont Creek decided to focus on the fund's best investments and stop backing the less-promising start-ups. It wanted to be sure it had enough cash for the next few years for the winners. The venture firm ranked the start-ups in the fund's 16-company portfolio with an A, B or C grade.</br></br>"We're doubling down on the As and likely won't invest any more capital in the C companies," says John Steuart, a Claremont Creek managing director. "The portfolio is competing against itself and it's survival of the fittest. It's brutal."</br></br>Gene Security, a fast-growing maker of genetic tests to identify potential abnormalities in embryos, got an A. Last month, Claremont Creek poured $3 million into the company on top of $2.7 million it has already invested.