Phila. venture-capital fund seized by U.S., cites SBA losses

Murex Investments I LP, a Philadelphia venture capital fund focused on poor neighborhoods, has been taken over by the U.S. Small Business Administration after its losses exceeded levels allowed SBA-backed funds. The takeover settles a civil compaint filed by Zane Memeger, U.S. Attorney for Philadelphia, on SBA's behalf under provisons of the federal New Markets Venture Capital Program which set conditions for taxpayer-backed venture capital investments. The government says Murex owed $2.6 million.

The Murex fund, founded in 2003, raised $13.75 million from banks and other investors, including $8.5 million in SBA investment guarantees and $1 million in Pennsylvania state economic development funds, according to Joel Steiker, managing partner at the fund's parent company, Murex Investments. Murex invested in a string of successful East Coast companies, including fund-transfer firm PayQuik of Bala Cynwyd, acquired by Citigroup in 2008 for a price five and a half times what Murex had invested, and AnySource Media of Malvern, bought by DivX in 2009.

But Murex, like other funds that used the New Markets program, had a tough time finding a lot of good investments in the areas to which it was restricted by the program. The bankruptcy last November of Murex-backed, Chester-based library computing supplier Advanced Workstations in Education left Murex with debts it couldn't pay. Advanced Workstations was sold in a Chapter 11 Section 363 auction in April, by investment banker J. Scott Victor and his colleagues at SSG Capital Advisors, West Conshohocken, to Blackstreet Capital, a Bethesda, Md.-based turnaround investor.

In a statement, SSG blamed the failure of Advanced Workstations, which employed 50 at its 2013 peak, on an "aggresive multi-year sales initiative" to sell to public and private schools, which "failed to meet revenue expectations." Steiker says he hopes the eventual sale of other Murex investments will help pay the fund's remaining SBA obligations.