SSTI Digest

Geography: Missouri

People & TBED Organizations

Bo Fishback is the new vice president of entrepreneurship for the Kauffman Foundation.

People & TBED Organizations

Bob Calcaterra announced he is resigning as president of the Nidus Center for Scientific Enterprise, effective this spring, to help form a venture capital fund.

People & TBED Organizations

RiverVest Venture Partners, a life science venture capital firm headquartered in St. Louis, announced it will be opening an office at the BioEnterprise facility in Cleveland. The office will be managed by Karen Spilizewski, who is joining RiverVest on a part-time basis as a vice president on Jan. 1.

Study Finds Angel Groups Receive Returns Consistent with Other Investments

By nature, angel investing is a risky endeavor. Angels are often involved with unproven seed- and early-stage companies and are frequently the first outside investors to become involved in a new venture. Despite these risks, a report released by the Ewing Marion Kauffman Foundation and the Angel Capital Education Foundation argues that angel investors working through investor groups often achieve attractive returns. Although only about half of all angel deals result in a profitable return, angels who maintain a portfolio of investments and have the resources to devote to extensive due diligence and company oversight frequently see returns that are competitive with other types of equity investment.


The authors of the report, Robert Wiltbank of Willamette University and Warren Boeker of the University of Washington, conducted a survey of 539 active angel investors to find out more about their background and the results they had seen from their investments. Since there are no legal reporting requirements for angels, the sample was limited to investors who are associated with angel groups.


On average, these investors engaged in slightly more than one deal a year between 1990 and 2007, the period covered by the survey, and had about nine years of investment experience. Three-quarters of all investments were directed toward seed- and start-up-stage businesses. Their median investment was $50,000, including all follow-up investment. The distribution of investments between sectors was similar to that of the venture capital industry, with software receiving the most attention followed by health/biotech and business products and services.


About 61 percent of angel investors in the study garnered overall returns that exceeded their investments. Only 48 percent of individual exits earned a full return on the investment, however, indicating that investors who maintain a portfolio of investments tend to accumulate greater returns than one-time investors.


Wiltbank and Boeker also evaluate the impact of investor-side factors that can significantly affect the profitability of an exit. Those include:

Missouri Group Lobbies for Statewide TBED and Capital Strategy

Although Missouri frequently ranks in the top 20 states for federal research grants and academic R&D, the state consistently ranks much lower in the creation of new high-tech companies. A recent report by Dr. Mark Parry of the University of Missouri-Kansas City Bloch School of Business suggests that early-stage high-tech entrepreneurs and companies have been unable to secure sufficient capital to launch successful ventures. Part of this capital deficit has been due to a lack of state investment in capital formation and access programs, he contends. While neighboring states spent an average of $2.79 per resident in 2006 on capital formation initiatives and similar states such as Arizona, Ohio and Minnesota spent $2.94, Missouri spent only $0.10. Parry argues that this lack of spending has contributed to the state's persistent difficulty in translating its intellectual capital into new companies.


One problem identified by the report is that although the amount of early-stage capital under management in Missouri has increased over the past six years, the amount invested in Missouri companies has declined. Angel and venture investors are not finding high-quality deals. The state's current capital strategy, which has primarily focused on tax credits such as the Small Business Investment Credit and the New Enterprise Credit, has been successful at attracting venture firms but not at helping pre-seed and seed-stage companies develop into desirable candidates for investment.


Parry presents several guiding principles for a capital formation strategy in Missouri that could begin to successfully address the state's needs. The report argues that the state's investment in capital programs should be no less than $15 million annually and should focus on increasing investment in pre-seed and seed-stage companies. Also, the state's capital strategy should be embedded in an overall strategy to improve Missouri's innovation economy. This approach helps to ensure that these funds are contributing to high-tech development and effectively leveraging intellectual capital.


Last month, a group of representatives from Missouri companies and economic development organizations released a proposal for a statewide TBED strategy built on Parry's recommendations. The proposal, dubbed the Grow Me State Initiative, calls for the creation of a statewide blue ribbon panel of representatives from the high-tech and finance community to design a five-year strategy for technology-based development. This strategy would create new networking opportunities, facilitate the creation of new angel and sidecar funds, and seek to expand the state's TBED offerings.


The initiative also calls for the governing boards of Missouri's 116 state and local pension funds to focus a portion of their investments on strategic in-state companies and industries.


Finally, the initiative would create three new programs to support early-stage companies and investors:


Dr. Paul Kedrosky has joined the Ewing Marion Kauffman Foundation as a senior fellow.

SSTI Job Corner

Complete descriptions of these opportunities and others are available at

The Missouri Small Business Technology Development Center, which focuses on strengthening the technological competitiveness of Missouri's businesses, is seeking someone for the position of technology commercialization specialist/counselor. This person will serve as a statewide specialist to provide leadership, expertise and training to university faculty and staff and private sector clients, as well as guidance for commercialization of products and development of companies. A master's degree in engineering, business, science or a related area with appropriate coursework, along with five or more years of relevant experience, is required.

South Dakota State University (SDSU), the state's land-grant institution with more than 11,000 students, invites applications and nominations for the position of technology transfer coordinator in SDSU's Office of Research and Sponsored Programs. The technology transfer coordinator is responsible for overseeing university activities of faculty, staff and students for technology commercialization. He or she will review policies and procedures insuring all agreements adhere to university, South Dakota Board of Regents, and federal policies and perform other responsibilities. An MS or MA degree in a relevant field of study, plus five five years of experience in research management, intellectual property management, technology transfer, or a related area, is required.

TBED People

Thom Ruhe is leaving JumpStart Inc., a venture organization in Cleveland, to become director of online initiatives at the Ewing Marion Kauffman Foundation.

Missouri Approves $32M for Bio-Ag Research, TBED

Two bills passed by the Missouri General Assembly last week include more than $32 million to support new initiatives to promote TBED activities in the state. Programs to support bio-agricultural research, technology commercialization and business growth won the lion's share of the new appropriations.

Funding for Missouri's Life Sciences Research Trust Fund, which was stalled during last year's legislative session, finally made it through the legislature, with last week's passage of the 2008 budget bill. The Trust Fund was created in 2003 to support life science research, commercialization and technology transfer. HB 688 allocated 25 percent of the state's tobacco settlement funds beginning in fiscal year 2007 to the Life Sciences Research Board, which administers the fund. However, concern over funds being used for embryonic stem cell research led the General Assembly to divert the $37.5 million appropriation last session. In November, voters approved an amendment to the state constitution that prohibits state or local governments from preventing embryonic stem cell research (see the  Nov. 13, 2006 issue of the Digest).

Steering clear of any further controversy this year, legislators approved a $13.4 million appropriation for research focusing on animal health and nutrition, renewable energy and plant science. The funds are limited to a one-time appropriation.

The state has an aggressive animal sciences corridor, and the trust will invest in projects to invigorate the research base to help encourage and support this industry cluster, said Mike Mills, deputy director of the Missouri Department of Economic Development.


The General Assembly also passed HB 16 last week, which includes more than $15 million from the Lewis and Clark Discovery Fund for several new TBED initiatives through the Missouri Technology Corporation, including:


Jan Lesher was named director of the Arizona Department of Commerce, replacing outgoing Gilbert Jimenez.

Missouri Passes Embryonic Stem Cell Amendment

Voters in Missouri approved, 51 percent to 49 percent, an amendment to the state constitution that will prohibit state or local governments from preventing embryonic stem cell research. The amendment also defines what type of research is permitted.


The vote comes after years of controversy in the state with frequent attempts by some state legislators to restrict the research in the state. The amendment is the first of its kind in the nation to remove the issue from the legislature and put it directly to the voters.


The amendment will accomplish the following, according to the fair ballot language on the website of the Missouri Secretary of State:

Harvard Prof Receives Kauffman Prize Medal for Research on Social Networks and Innovation

The Ewing Marion Kauffman Foundation has awarded its second Kauffman Prize Medal for Distinguished Research in Entrepreneurship to Professor Toby Stuart of the Harvard Business School. The medal is given every two years to a scholar under the age of 40 whose research has made a significant contribution to the study of entrepreneurship and innovation. Stuart accepted the medal last month, along with a cash award of $50,000, at the Academy of Management's annual meeting in Atlanta.

At the ceremony, the Kauffman Foundation cited Professor Stuart's pioneering research on social networks and their effect on entrepreneurship as an example of outstanding contribution to the field. Stuart's latest research suggests that entrepreneurs must be perceived positively within their local entrepreneurship community in order to create successful new firms.

As a service to those Digest readers who do not regularly review the latest academic research in the field, SSTI offers the follow summaries of a selected set of Professor Stuart's most recent articles: