Westborough Firm Tries Novel Investment Strategy
Westborough-based Boston-Power Inc., maker of lithium-ion batteries, has created a separate company to invest some of the $55 million in venture capital money it raised in January, according to the company and corporate records filed with the state.
Christina Lampe-Onnerud, Boston-Power's founder and CEO, said via e-mail that after receiving its most recent round of venture financing the company is in a "favorable cash position." As a result, the company established Boston-Power Securities Corp. in December 2008 "to help facilitate a higher return on investments, which has become challenging for everyone in the current economic environment."
Lampe-Onnerud is also president and CEO of the newly created investment company, and Anthony Evnin is a director. Evnin is a principal with Palo Alto, Calif.-based Venrock, which is a venture capital investor in Boston-Power.
Boston-Power has raised a total of $125 million since its inception in 2005.
The new company's articles of incorporation say the purpose of the corporation is to "engage exclusively in buying, selling, dealing in or holding securities on its own behalf," although company officials said other types of investments were not out of the question, including buying smaller companies from which it could make a profit.
The creation of a company to invest venture capital money is fairly unusual, according to Scott Pueschel, a partner in New England law firm Pierce Atwood. He also said Massachusetts companies sometimes create the same type of corporation to put the proceeds from an initial public offering, or IPO. While Pueschel is not a tax specialist, he said there can be tax benefits to creating the securities corporation until the company needs the funds.
At the same time, it isn't unheard of for companies with venture capital investments to conservatively invest a portion of that money, according to Mark Heesen, president of the National Venture Capital Association in Virginia. "They invest as conservatively as possible, such as treasury bonds or CDs (certificates of deposit), those sorts of things," he said.
WBJ Web Partners
Most Recent
Most Recent
0 Comments