By Cliff Peale
Enquirer staff writer

Blue Chip Venture Co. will reap a return nearly triple its investment in Advertising.com Inc. when the Internet marketing firm is sold to America Online Inc. later this year.

Cincinnati-based Blue Chip invested $6.9 million in Advertising.com starting in 1999 and will get $18.2 million after the $435 million cash deal closes, officials at the venture-capital fund said Thursday.

The cash will go directly to investors, which includes pension funds such as the city of Cincinnati's and corporations, including local names such as Fifth Third Bancorp and Procter & Gamble Co.

"It's a meaningful victory," managing director Jack Wyant said. "Not only because of the return, which is why we're in business, but also because it's liquid. It's not a stock that's restricted. It's just plain cash."

Blue Chip owned about 4 percent of the stock in Advertising.com, which posted revenue of about $132 million and income from operations of about $12.1 million last year.

Earlier this year, it had filed to offer stock publicly before AOL offered to buy it.

Investors in venture-capital funds often expect high returns, 25 percent or more. That return comes when a portfolio company is sold or goes public, often called an "exit strategy."

Blue Chip formed in 1992. It was Greater Cincinnati's first mainline venture-capital fund and has built four funds totaling $615 million and invested in about 120 companies.

Blue Chip has had some big hits, including Richwood Pharmaceutical Co., which was sold to British drugmaker Shire Pharmaceuticals in 1997. Blue Chip turned a roughly $2 million investment into a $17.3 million payday at the sale.

Other local companies in which Blue Chip has invested include Atomic Dog Publishing, Xanodyne Pharmaceuticals and Regent Communications Inc., said Tim Schigel, director.

Schigel said Blue Chip is building a specialty in media and marketing services, which helped it win an opportunity to invest in Advertising.com.

"It's really harnessing the power of the Internet to make advertising more effective," he said.

E-mail cpeale@enquirer.com