Potomac Access... Venture Capital

12/25/2000 By Steve Robblee Fund Facts:

Types of investments: Software applications and services, enabling technology, communications infrastructure and video compression

Typical investment size: $1 million to $4 million to start, plus follow on

Current fund: $80 million

Percent invested: 35 percent

Sample investments: NC Inc., Eyecast Inc., One World Software Inc.

How to reach the fund: bizplan@newhorizonsvc.com


New Horizons Venture Capital is not your ordinary regional early-stage venture fund.

Most early-stage funds of New Horizons’ size average about one investment a month, but the Arlington, Va., fund has invested in just three companies since May 1999. According to its founder and managing partner, T.J. Jubeir, New Horizons is purposely selective.

He wants to focus on companies that can expand internationally or can create a synergy with a portfolio company in Capital Partners, a $120 million leveraged buyout fund that is run by the same management as New Horizons.

For example, Boston–based One World Software Inc. was an attractive investment because the software development company had satellite offices in San Francisco, San Diego, Beijing and Amman, Jordan.

“It’s a more cost-effective use of resources, and you have no time zones anymore” so projects can be completed faster through round-the-clock work, Jubeir said.

Of course, many of New Horizons’ limited partners are wealthy individuals and corporate chiefs in Europe, the Middle East and Africa. Those investors can make suggestions about exploiting opportunities in those overseas markets, Jubeir said.

“Overall, I think there’s an underemphasis on international scalability,” he said. “What I’d hate to see is companies going after the international to the detriment of the domestic market.”

As a Saudi Arabian citizen who has lived in many parts of the world, Jubeir can appreciate the significance of global opportunities. Much of his background is in specialty finance, and he’s worked for organizations from Bain Consulting to the Saudi government’s Ministry of Petroleum and Mineral Reserves. He also played a role in negotiating anti-pollution agreements for the Earth Summit in Brazil, which wrapped up in 1992.

New Horizons sets itself apart from most venture funds with the amount of follow-up capital it expects to provide. Most early-stage funds set aside 35 percent to 50 percent of the fund for follow-on rounds. Jubeir has created New Horizons to make bigger bets in its portfolio companies, which also can create bigger risk if something goes wrong down the road.

“For every dollar we invest, we expect to invest $3 to $5 in follow-on rounds,” he said.

For example, the fund followed a $2 million investment in Eyecast Inc. of Herndon, Va., with a $4 million investment this April. New Horizons likely will add to that should Eyecast need more funding in the future, Jubeir said.

Because it plans to take such big stakes, New Horizons looks to be the lead investor for its initial investments. In that respect, New Horizons is similar to many early-stage funds in the region.

In his own words:

What’s the most important thing you look for in evaluating a business?

“There are three key elements. The most important is the people — managers, advisers, service providers. The second element is opportunity and what is the context of the opportunity? The last one is what kind of deal structure can we put in place?”

What is the most common mistake new entrepreneurs make?

“[Not] understanding ramp up and the challenges of ramping up. That’s not the case with repeat entrepreneurs.”

What kinds of companies are you mostly looking for?

“The ones that fall into horizontally focused plays in the particular areas I mentioned before.” (See “Types of investments,” above.)

What’s the hardest decision you’ve had to make as a venture capitalist?

“Replacing a senior officer of a company due to fit rather than anything else.”