A Room With a Prospectus

From an office in Old Town Alexandria, overlooking the historic waterfront, Columbia Capital Corp. has quietly built itself into one of Washington's most successful high-tech capital managers. Since its founding in 1987, Columbia Capital has financed and consolidated cellular systems in many of the nation's smaller markets. It has also funded and helped manage a number of successful niche companies in the cellular industry. Now Columbia is branching out from the wireless industry to fund start-ups in online services and software. One such company, Space Works Inc., is based in Rockville, Md.

• GO Communications Corp., formerly Columbia PCS Inc., is based in Alexandria, Va. It will bid on the so-called entrepreneurial block of licenses, for small and minority businesses, to be auctioned by the FCC for personal communication services. It has raised more than $100 million in equity and $700 million in low-cost senior debt. However, the FCC auctions, originally scheduled for July 11, have been delayed by the Supreme Court's recent decision forcing stricter scrutiny of set-asides for minority businesses.

• Columbia Spectrum Management, Alexandria, Va., was founded by the principals of Columbia Capital to help relocate spectrum users evicted from their radio band in the 2 Ghz band allocated for PCS. Thomas Stroup, formerly head of a key wireless industry association, runs the company, which is a classic example of the kind of niche player Columbia Capital has traditionally financed.

• Rockville, Md.-based SpaceWorks Inc. is the company's first venture into online services. Founded in 1993, and with a product in development since 1990, SpaceWorks will provide enabling technology for building business-to-business applications on the much-hyped information superhighway. Merisel and WordPerfect are already clients. This is perhaps the company's riskiest foray yet. Columbia Capital's ever-more ambitious strategy mirrors the changing fortunes of the greater Washington area -- referred to somewhat cumbersomely as the "Netplex" for its forte in network services, telecommunications equipment, systems integration, and most recently, semiconductors. The opening of chip foundries in Virginia by both Motorola and IBM add a manufacturing capacity to the high-tech area. Meanwhile, the federal government's role in regulating telecommunications and issuing wireless licenses has made the area a nexus for the telecommunications industry. Columbia Capital's co-founder Mark Warner, who could be the next Democrat to challenge John Warner for his U.S. Senate seat next year, also points to an often-overlooked component of the area's booming high-tech economy -- the space industry. The region is home to Orbital Sciences Corp., Comsat, Hughes Network Systems and numerous satellite imagery processing firms. All that spells megaopportunity for merchant bankers and venture capitalists, who have long passed over the greater Washington area for opportunities in Silicon Valley or Boston's Route 128. Columbia Capital's strategy is to branch out to online services and software from the wireless industry. "We think this region is second only to Silicon Valley. It has a wealth of opportunities," says Warner, who, among other things, is a co-founder of Nextel Corp. "Seventy percent of the [companies in this region] didn't exist 10 years ago." The company calls itself a hybrid merchant banker and venture capitalist. It has played a key role in mergers and acquisitions in the smaller cellular markets. The 15 managers also put up their own money, at least at first, sinking anywhere from $1 million to $20 million in a start-up. "We're putting in our own dollars," said Warner. "We are very much more active [than venture capitalists] in the management of these companies." They also bring big-time investors into deals, as they did with Fidelity Capital, Mitsubishi, Alltel and Spaceworks.