Ken Peterson is a wealthy Vancouver investor with a global appetite for risk and reward.
For three decades, he’s been a frequent flyer, visiting his far-flung investments, such as an Irish telecom company and an aluminum smelter in Iceland.
Now, he’s 65 and tired of airports. But, even if he doesn’t want to fly as much, he’s not ready to stop making deals. And that could be a major development for companies here at home.
“I probably won’t retire in the traditional sense, but I don’t want to be doing the same things,” he said.
Last year, he sold Hibernia Networks, a builder and operator of high-speed underwater cables spanning the Atlantic Ocean, for $600 million. Since last summer, Columbia Ventures has spent more than $30 million on an experimental paper pulp mill in Eastern Washington and led a $17 million fundraising round for Vancouver tech startup RealWear.
Those are just two of the company’s new local and regional investments. And more could be on the way, said Peterson.
“We are continuing to look at other area businesses that are in fundraising mode,” he said. “Between those two things, I’m sure it will keep us busy. And we’ll find some (more).”
The investment in RealWear, a Silicon Valley emigrant, made headlines throughout the tech community and excited local experts. Venture capital, an important ingredient in fostering a tech scene, has not been easy to find in Clark County.
With a deep-pocketed firm showing renewed interest in keeping its money close, those experts say Vancouver is flirting with becoming more like Portland and Seattle. At least, that’s the hope.
Collegial contrarian
There is a painting in Peterson’s office, wherein a man, with his back to the viewer, looks out on an empty landscape as a fire burns under his chair.
“It’s called The Man in the Hot Seat,” said Peterson, sunk into his own computer chair next to the painting. He laughs again and reflexively scratches at a full head of gray hair.
Columbia Ventures recently moved to new offices near the old Evergreen airport in east Vancouver, so the painting is sitting on the ground, next to a stack of boxes. The office is elegant but sparse — the firm has a staff of nine and there are a lot of empty chairs.
After 30 years in business, Peterson said he no longer feels like a man in the hot seat. He used to, thanks to a self-described “contrarian” investment style.
In the 1980s, Peterson was a plaintiff’s lawyer in Hermiston, Ore., with one employee: his wife. Then a newspaper article about the aluminum industry sparked his curiosity. Soon, he had pooled his money, his wife’s money and some of his friends’ money to buy a smelter in the Columbia River Gorge.
“I bet everything I had — and more,” he said.
By then, the aluminum industry in the Pacific Northwest had already passed its heyday. It rebounded enough in the 1990s to give a favorable return on investment before Peterson was bought out.
Next, he founded Columbia Ventures and began a similar string of calculated gambles. Columbia bought into telecom after the industry was past its zenith. And with domestic aluminum industries struggling, Columbia Ventures built its own geothermal-powered smelter in Iceland, which it sold for a profit in 2004.
His $32 million paper mill in Eastern Washington will use an experimental pulping process, even as other mills are downsizing or closing outright in Camas, West Linn, Ore., and Oregon City, Ore.
“I discovered that I can handle risk better than other people,” he said. “Sometimes I’m wrong.”
Recent failures include a hybrid gambling and video game startup that didn’t pan out, as well as a Vancouver co-working space that never took off.
Peterson said he is undeterred; Columbia Ventures is not in a hurry.
“These things happen,” he said. “It can take awhile. We’re pretty patient.”
Rocket fuel
Boosting the local tech scene won’t be nearly as dramatic as, say, turning an Icelandic cow pasture into an aluminum smelter, but local industry experts say some heavy lifting is in order.
Clark County has added new startups like RealWear and houses other firms positioned for expansion, such as software enterprise Home Depot QuoteCenter and Perfect Company, a maker of smart kitchen tools.
Still, Southwest Washington has a low profile as a home for technology entrepreneurs, which some paint as a bonus: it is close enough to Portland and Hillsboro, Ore., to attract tech talent, except it boasts cheaper office space and more accommodating local officials, they say.
But venture capital, a bedrock for growth in Portland, Seattle and the Bay Area, has been elusive, said Dave Barcos, president of the tech startup organization The Bridge.
“I think there is no lack of capital up here in Vancouver, but it is, for the most part, really conventional investing,” he said. “They look at securities, construction and large industrial complexes and things like that.”
Vancouver has only recently started to see an uptick in riskier investments, according to PitchBook, a Seattle-headquartered data company that tracks venture capital.
Last year, Vancouver firms received $57.7 million in venture capital investment, more than the previous five years combined. The $17 million raised by RealWear already makes 2018 Vancouver’s fourth most active year. The number of investments — not just dollars — has also risen, according to PitchBook’s data.
Those figures, however, pale in comparison with rest of the Portland metropolitan area. Not including Vancouver, the area welcomed $275.3 million in investment last year.
Stan Hanks, Columbia Ventures’ strategist, said most local investors likely view venture capital as too risky. He agrees. Traditional banks invest on proven assets, while venture capitalists bet on potential.
“It’s not completely dissimilar from buying a lottery ticket,” he said.
He added that there haven’t been a lot of local companies that warrant this kind of discussion, and that perpetuates the cycle. Investors go where strong companies are, who go where the investors are.
“My mentor used to say that venture capital is like rocket fuel: if you’re not building a rocket, you don’t need rocket fuel.”
First on the dance floor
Hanks, who spearheaded Columbia Ventures’ investment in RealWear, believes the move could catalyze the local tech industry, emboldening both startups and investors.
“There needs to be more companies founded. And those companies need help growing,” he said.
RealWear makes a head-mounted, voice-controlled computer billed to make workers in rugged industries more effective. Headquartered at the West Barracks at Fort Vancouver, the company aims to grow from 80 employees to 300 within a few years.
The company is also the poster child for Clark County’s tech scene. It moved from the crowded Silicon Valley last spring, where it struggled to find funding. CEO Andy Lowery said that after the $17 million infusion, the company feels like a “great big purple fish” in the Southwest Washington pond, and other companies could feel that way, too.
“If I’m a seven-person software company down in San Diego, that encourages them to say ‘Maybe I should be in Vancouver,’ ” he said. “Every day, people are deciding to go where the capital is.”
That’s not to say Silicon Valley heavyweights will follow suit immediately, but the Vancouver-Portland metropolitan area is seeing more and more money pour in, said Tom Sperry, co-founder of Rogue Venture Partners in Portland.
Sperry said both Portland and Vancouver are trying to bill themselves as cheaper alternatives to Seattle and the Bay Area, and growing the tech ecosystem will continue to take effort.
“It takes a community to build that up” in Portland, he said. “We’re a part of that community and that’s something Clark County is going to need, as well.”
Peterson’s investment may have kick-started something in Clark County. Still, he said he expects to dial things back a little bit at his age. For growing the tech scene, it might be someone else’s turn in the hot seat.
“I’m not sure what the recipe for success is,” he said. “But it’s something more than what it is now.”
Then again, Peterson said his own father recently retired at age 91.
