Kansas Bioscience Authority Commits Funds to Increase Venture Capital (1)

Kansas Bioscience Authority Commits $50 Million to Increase Venture Capital, Accelerate Bioscience Business Growth

Posted on 11/06/2009

TheKansas Bioscience Authority recently announced that they havesignificantly increased the amount of venture capital available toinnovative Kansas bioscience businesses - and to lead the state'seconomic recovery - approving a commitment to invest $50 million ineight private venture capital funds. The KBA investments will create apowerful magnet for private capital investment from around the countryin Kansas bioscience companies.

To qualify for KBA investment,the eight funds are required to have a substantial presence in thestate, including establishing Kansas offices. Additionally, the fundmanagers must each raise a minimum of $25 million from private andinstitutional sources, effectively leveraging the KBA's investment upto $250 million.

KBA president Tom Thornton said the fundaddresses an immediate need and is a key component of the KBA's effortsto position Kansas as a national leader in the biosciences arena.

"Capitalis the lifeblood of bioscience companies. Innovators all across Kansasare developing world-class bioscience products and services only to seetheir true societal and economic development potential suffer for alack of early-stage capital. With the KBA's investment commitments,Kansas is attracting the attention of some of the most respectedventure capital firms in the country to help high-growth potentialbioscience companies in Kansas access growth capital to gain full-scalecommercialization," Thornton said.

The funds will work closelywith the KBA's Heartland BioVentures program, which provides hands-onbusiness assistance and financial resources to high potential earlystage bioscience companies to help better position them to raiseprivate growth capital to bring globally competitive products andservices to market.

"What is unique about our approach is thatwe are helping develop credible, quality investment opportunities whilealso partnering to ensure these opportunities get funded," Thorntonsaid.

The KBA board of directors approved commitments to investwith the following venture capital firms (listed alphabetically bycommitment size):

· Burrill & Company, San Francisco, CA, $10 million
· MPM Capital, Boston, MA, $10 million
· IN Partners / MidPoint Food & Ag, Carmel, IN, $5 million
· Meadowlark Venture Partners, Chicago, IL, $5 million
· Midwest Venture Partners, Chicago, IL, $5 million
· Open Prairie Ventures, Olathe, KS, $5 million
· Prolog Ventures, St. Louis, MO, $5 million
· Triathlon Medical Ventures, Cincinnati, OH, $5 million

Together, these funds help to provide a range of expertise in the bioscience sectors in which Kansas has existing strengths: animal health, bioenergy, biomaterials, plant biology, and human health.Working with multiple funds also exponentially expands the venturecapital network focused on bioscience companies at varying stages ofdevelopment in Kansas and provides the greatest assurance of increasedventure capital flow into the state.

The funds were selectedafter a rigorous evaluation process that began in February andincluded: an assessment by an independent, nationally recognizedfinancial services firm; extensive due diligence by KBA staff members;a detailed review by the KBA investment committee; and unanimousapproval by the KBA board of directors.

Entrepreneurs andventure capital experts from around the country underscored theimportance of the strategy of jumpstarting the growth of bioscienceventure capital in Kansas:

Dr. Nicholas Franano, chief executiveofficer of Novita Therapeutics, said: "This new fund will provideKansas businesses with much needed access to national and internationalnetworks of capital and investors and will accelerate the growth of thebiosciences industry and jobs in the state of Kansas. Once again, theKansas Bioscience Authority has come through with a big win."

DanBerglund, president and CEO of the State Science & TechnologyInstitute (SSTI): "With the creation of the Kansas Bioscience GrowthFund, the KBA is addressing a critical building block needed for atech-based economy: capital for start-up companies. This isparticularly critical now as venture capitalists make fewer,later-stage investments. Areas like Kansas that make these kinds ofinvestments are going to be the ones that benefit in the future."

JimJaffe, president and CEO of the National Association of Seed andVenture Funds (NASVF), said: "Access to capital for seed and earlystage companies is an essential element in creating jobs and buildingworld-class companies, especially in today's venture environment whenmost funding is going to later stage opportunities. NASVF commends theKansas Bioscience Authority for taking a leadership role in Kansas andbeing a catalyst for innovation and supporting the seed and early stageentrepreneur."