Skypoint Capital and Venture Coaches, two of Ottawa's top venture capitalists, said Monday they will merge under the Skypoint name in order to foster growth.

The combination will create a company with 17 staff in Ottawa and Montreal with US$185 million under management.

The decision comes at a time when the VC industry is struggling with the collapse of a number of once promising startups and a poor market conditions among many others. The list of casualties in Ottawa includes the likes of Ceyba, while survivors such as Innovance are limping along with their operations cut to the bone.

In many cases, exit strategies have left investors with little or no return on their investment. Case in point was the acquisition a year ago of Ottawa's Solidum Systems by California's Integrated Device Technology Inc. The deal left investors with less than 50 cents for every dollar they invested. Skypoint was one of those investors.

Skypoint president Andy Katz, however, said Monday the current market is the ideal time to grow, rather than pull back and circle the wagons.

Skypoint was founded in 1998, Venture Coaches two years later. Combined the companies' portfolio includes investments in 34 firms. Most of those investments are located in Canada, but also in the U.S., Israel and the U.K. Nineteen of the firms have operations in Ottawa.

At Venture Coaches recent local investments include contributing to two rounds worth a total of US$1.5 million for PointShot Wireless earlier this year and participating in a $26.4-million round for Meriton Networks in December 2002.

Skypoint, meanwhile, contributed to Atreus Systems' US$13-million round in September and Galazar Networks Inc.'s $22.7-million round in April.

Claude Haw, founder and managing partner of Venture Coaches, will become a general partner at Skypoint alongside Leo Lax, Andrew Katz, Peter Charbonneau and Louis Desmarais. Larry Perron will join Skypoint as a partner and Jaswinder Kaur will become a senior associate and director of marketing.