Startup fund is 'open for business'; Seed capital available for state entrepreneurs

BOSTON - Greg Main had a message for Oklahoma entrepreneurs Tuesday, and he delivered it from a podium on the floor of the BIO 2007 conference in the Boston Convention and Exposition Center.

The $7.25 million Oklahoma Seed Capital Revolving Fund - the state's first such fund - is ready to invest in Oklahoma startup companies.

"Our clients are being notified today of the availability of the fund and invited to participate," Main said. "We are open for business."

Main is president and chief executive officer of i2E, the not-for-profit corporation that manages the seed capital fund for the Oklahoma Center for the Advancement of Science and Technology. i2E works with many of the state's technology-based startup companies, providing business mentoring and helping them locate sources of capital.

The seed capital fund was created through a legislative initiative and funded with $5 million by the last state Legislature after a 20-year lapse from concept to creation. Less than two months later, $2.25 million was added to the fund with investments, including $1 million from the Oklahoma Capital Investment Board and $1.25 million from the Oklahoma Development Finance Authority.

It was just coincidental timing that led Main to announce the availability of the fund while helping lead the state's biotech delegation at the annual BIO show here, the industry's largest conference.

Main was scheduled to make a presentation at the Oklahoma booth Tuesday, so he used the opportunity to discuss the seed capital fund and other initiatives to aid Oklahoma startups. The fund won't be limited to i2E clients or exclusively to biotech companies, Main said.

The seed capital fund will invest in amounts of roughly $200,000 to a maximum of $700,000 in Oklahoma companies.

"We will invest in advanced technology companies, and I expect a good number of those will be in the bioscience area," he said.

Representatives of some of those companies were within the sound of Main's voice Tuesday, helping to staff the Oklahoma exhibition booth and greet visitors who wandered by. Tom Kupiec owns two Oklahoma City-based life science companies, and he said he welcomed a new source of potential investment capital.

"It's a great deal for Oklahoma," said Kupiec, whose two companies, Analytical Research Laboratories and DNA Solutions, both are based in the Presbyterian Health Foundation Research Park. "It's been a long time coming; I wish it had occurred several years ago.

"I think the new fund will propel companies to the next level. There has been a lack of seed money, and this (fund) is warranted."

Main said several potential "co-investors" will participate in some of its deals, including the new Oklahoma Life Sciences Fund II, a $10.5 million fund that closed less than two weeks ago. That fund may invest with the seed capital fund in selected life science deals, said William Paiva, the fund's manager.

Paiva said the new Life Science Fund is more than double the state's original life science fund, which is fully invested with $5 million in five Oklahoma startups. All are thriving, he said.

"All of them are still in business and they have attracted more than $150 million in capital investment," he said.

"It has been a successful fund, finding opportunities, taking the risk out of them and attracting downstream capital from top-tier venture firms."

As for the seed capital fund, it was first proposed in 1987 and approved by Oklahoma voters in 1988, but it wasn't funded until 2006. OCAST awarded the contract to i2E in competitive bidding in February.

Finally, the fund has become reality, and Main stepped to the podium at the mecca of biotechnology research and commercialization - the BIO conference - to announce it.

The fund is but one tool i2E has to help move Oklahoma research toward commercialization, Main said. The recently created Seed Step Angels group should make more investment available to early-stage companies, he said.

In addition, it has the Technology Business Finance Program at its disposal, which invests in very early stage companies to help them generate further investment.

Main described the seed capital fund - newest tool in the economic development arsenal - as a "hybrid evergreen fund that will last a full 15 years."

"It is structured to take in additional capital as we go along," he said.