venture dev orgs

Energy storage startup with government-sponsored funding goes public

ESS Inc., a company that closed a deal to go public earlier this month, was able to leverage public capital at its early stages to accelerate its success as a startup. Founded in 2011, the Wilsonville, Oregon, based company manufactures batteries for long-duration energy storage applications. In 2012, ESS Inc. received a Phase I Small Business Innovation Research (SBIR) award from ARPA-E, and additional grant support from the Oregon Nanoscience and Microtechnologies Institute (ONAMI), an SSTI member. ONAMI is an Oregon-based non-profit that provides grants, equity funding and business development guidance to startups engaged in research-based scientific innovation. It receives funding from Business Oregon, also an SSTI member.

Unicorn with initial round of government-sponsored funding goes public

Benson Hill, a unicorn (a startup valued over $1 billion) that closed its deal to become a public company last week, was able to leverage several sources of public capital to accelerate its early success. The St. Louis-based agricultural technology company uses machine learning and genome editing to facilitate the production of sustainable and healthy crops.

Recent Research: VDOs should pick investment partners with exit-tinted glasses

Forthcoming research suggests venture development organizations, that is, those publicly-supported nonprofits that combine risk financing with expert technical assistance to grow local innovation-based startups, should give careful consideration to the exit histories of the venture capitalists they partner with to move the VDO’s portfolio firms through seed and series A investment rounds.

Venture development organizations find multifaceted success within their regions

Venture development organizations (VDOs) increasingly serve as the Swiss Army knife of small business growth and innovation throughout the country due to their diverse range of entrepreneurial programs, direct financing options, and commitment to local economic development. Their unique roles in the entrepreneurial ecosystems and regional public-private partnerships have allowed for startup success despite the financial instability brought on by the COVID-19 pandemic.

Venture CDFIs triple in two years; advice from SSTI members on pursuing this approach

The federal Community Development Financial Institutions (CDFI) Fund released a new report profiling certified CDFIs in FY 2019. Notably, 14 active CDFIs are certified as venture funds, an increase from just four in FY 2017. Between the periods covered by these reports, the CDFI Fund updated their certification process and received encouragement from SSTI and members to be more open to equity financial structures. The results suggest that this change has taken place.

Pace of exits picks up for venture development organizations in Q1

Venture development organizations (VDO), nonprofit organizations across the country investing in innovation startups to help grow their regional economies as well as earn a respectable return, saw at least 20 exits in the first quarter of 2018, based on data entered on Pitchbook.com. Here are some examples from the quarter:

$1.3 billion deal leads acquisition-heavy Q4 for VDO-backed exits

Most of the baker’s dozen of fourth quarter exits SSTI reviewed for publicly-sponsored venture investments reveal local employment likely to remain in place after the deals close, regardless of the deal structure. During the past three months, companies that 20 venture development organizations (VDOs) had invested in participated in at least 10 acquisitions, with seven resulting in operating subsidiaries under the new parent firm. Also in the mix for the quarter are one initial public offering (IPO), one sale of intellectual property and one leveraged buyout.

How IPO’s can affect innovation, talent, and entrepreneurship

Initial public offerings (IPOs) can alleviate financing constraints and help support important activities such as operations, R&D, and expansion. Despite these perceived benefits, new research finds that the transition to public equity – and the financial windfalls that follow – prompt many of a company’s early innovators to depart the firm, which has impacts on both innovation internally and at other firms.

3rd quarter exits for VDOs span industry sectors

Seventeen venture development organizations (VDOs) from across the country shared in the success from a baker’s dozen exits posted in Pitchbook during the third quarter of 2017.  Information tech companies lead the pack, but seven come from other sectors of the economy including life sciences, vehicle manufacturing, materials, polymers, robotics, and chemicals – demonstrating the important role VDOs may play in broadening innovation’s contributions to regional economies.

Snapshots of all 13, along with two more late Q2 deals, follow in SSTI’s third article looking at the economic development impacts of nonprofit and publicly-backed VDOs. The first two stories are available here (Q1:17) and here (Q2:17).

Regionally focused investors yielding more than ROI

An SSTI analysis of exits occurring during the second quarter by a number of venture development organizations reveals equity investment in innovation companies undertaken as strategic public-private partnerships for regional growth can yield more for their communities than just hitting the return on investment expectations of seed and traditional venture capital. The recent exits highlighted below reveal a variety of economic development impacts resulting from effective innovation investment strategies, including:

  • Increased competitiveness and growth of local firms through mergers and acquisition;
  • New market entry and new product lines for existing manufacturers;
  • Opportunities to broaden wealth generation among wider population;
  • Foreign direct investment and company relocation; and of course,
  • Wealth generation, tax revenues and job growth within the local community.

Note: this is SSTI’s second look at recent VDO exits; selected first quarter 2017 exits for VDOs are available here.  Second quarter highlights include:

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