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State funds readied for early stage tech firms
Oklahoman, The (Oklahoma City, OK)
March 1, 2007
Author: Jim Stafford; Business Writer
Almost 20 years after it was approved by voters, the $5 million Oklahoma Seed Capital Revolving Fund has become a reality.
The Oklahoma Center for the Advancement of Science and Technology announced Wednesday that its long-time partner, i2E, has created a subsidiary that will operate the seed fund.
The seed fund was proposed under the Economic Development act of 1987, approved by voters in 1988 and finally funded by the Legislature in 2006.
Why the almost-two decade delay in creating the fund after voters approved it?
"That's an interesting story," said Greg Main, chief executive officer of non-profit i2E, which mentors many of the state's early stage technology-based companies. "It was created in a time when there was a strong belief that it was needed but there wasn't any money. That was back in the days when the state had no revenue at all because it was coming out of the oil bust."
A serious effort was made to appropriate money to the fund about a decade ago when the state's budget was in better shape, but some questioned the need for a fund for early stage companies.
"Now, it's sort of the harmonic convergence," Main said. "There is both money available and a need at the same time."
i2E will work with as yet unnamed investment partners and with OCAST to create the process to select early stage technology-based companies for investments that likely will range from $250,000 to $750,000 through the new subsidiary, the Oklahoma Seed Capital Fund LLC, Main said. The investments will give the i2E and its investment partners an equity stake in the companies.
"Today marks the beginning of a major component that will increase the number of new high-tech Oklahoma firms," said Michael Carolina, executive director of OCAST, which is the state's technology-based economic development agency.
In 1987, OCAST was charged with stimulating seed capital investment in firms which will use innovation from applied research in profitable commercial applications.
"We've enjoyed much success through our pipeline of services that represents more than $2.4 billion invested in Oklahoma R&D," Carolina said. "The Oklahoma Seed Capital Fund LLC team led by Greg Main will be putting our seed capital opportunities into play.
"We can expect to see more advanced technology Oklahoma firms achieve leading roles in technology-based economic development.
i2E was selected as the administrator of the fund in a competitive bidding process and recommended by outside peer review, Carolina said.
"For 20 years, other states and foreign countries have looked with interest at the Oklahoma model for technology-based economic development," Carolina said. "We know already that others are watching our seed capital program to see how we make it work. Our goal at OCAST is to set the standard for accountability and effectiveness."
Main said the first investments could be made as early as the second quarter of this year.
"We've been aiming for this for a long time," he said. "We think we are ready and we think the companies are there. Based on our knowledge of the marketplace we think there is a significant pent-up demand."
About 80 Oklahoma start-up companies are clients of i2E, although applicants for the seed fund investment need not be clients, Main said.
The seed capital fund will actually exceed $5 million when it is joined by other investors, he said.
Seed capital provides for development, refinement and commercialization of product, process or innovation.
Copyright 2007, The Oklahoma Publishing Company
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