High-tech investor expects $20m loss

By PETER GRIFFIN

Venture capital company IT Capital has written down the value of three high-tech investments by $9.7 million and is expected to end the financial year with a loss of $20 million.

Chief executive David McKee Wright would not name the companies, but said Hamilton-based Deep Video Imaging was spared.

A developer of 3-D display technology, DVI has been on the verge of a breakthrough for more than a year.

Last February the company, in which IT Capital has a 41.8 per cent stake, attracted the attention of Korea-based computer monitor developers LG Philips.

Mr McKee Wright said that relationship was still progressing well.

"DVI has cutting-edge technology, so it goes through a long sales cycle. LG Philips are still in the process of going through and writing software for the product."

DVI looks to be the investment most likely to provide IT Capital with a return in the near future.

IT Capital is raising more from investors and will put some of that into DVI.

"We've got shareholder approval to place 100 million shares. We're in the middle of that process at the moment," said Mr McKee Wright.

Of IT Capital's other investments, web developer Terabyte Interactive and software companies Virtual Spectator and Golden Orb, it is Terabyte, a company working in the suddenly unfashionable dotcom space, that is closest to paying its way.

"Terabyte's dangerously close to making positive cashflow," quipped Mr McKee Wright.

Virtual Spectator had sealed impressive long-term software licensing deals but continued to burn through cash, he said.

Golden Orb was going through a financing process from investors other than IT Capital.

IT Capital's management are happy with the cost cuts of the past six months that reduced big executive salaries and shut offices in the United States and Australia.

The company has reported losses in the past four years totalling more than $29 million - not unusual for a venture capital company investing in high-tech start-ups in a volatile economic environment, but helped by some poor management and investment decisions.

It is not so long since former managing director Keith Philips was talking of IT Capital's $17 million fund available to invest in other local start-ups.

All that money seems to have gone in keeping IT Capital afloat.

Mr McKee Wright had no predictions on total revenue for the year.

But after about a month in the new job, he said the company's long-term plan was taking shape.