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Lousiana State University to Create Venture Capital Fund

Just a day after a biotechnology conference in New Orleans highlighted Louisiana’s lack of venture capital for startup companies, LSU System President William Jenkins told a state board Friday that a university-targeted venture capital fund should be up and running by September.

By:
Ned Randolph
The Advocate

http://www.nasvf.org/web/allpress.nsf/pages/8954

And at least three other unrelated funds — two private and one research parks-managed fund — could be coming soon.

"Louisiana is headed for an economic implosion unless we change our economic base," Jenkins told the Louisiana Economic Development Corp., the financing arm of the state’s Department of Economic Development.

The LSU Research and Technology Fund will offer seed money to startup companies that are able to commercialize research coming out of the state’s institutions.

People "with a brilliant idea" may also be eligible, though the final qualifications will be made by an independent fund manager, Jenkins said.

Consultant hired by the LSU Research and Technology Foundation, which started the fund, said the fund expects to raise $15 million to $20 million in early capital.

A longer-term goal is to close the fund with about $35 million, said consultant Francis Meyer.

The foundation has no direct control over the fund or fund manager, but may be the fund’s first investor.

The foundation issued a letter of intent to invest, pending a due diligence assessment, Meyer told the board. "Others are waiting to see what LSU is going to do," he said.

Also interested are Tulane University, the state Teacher’s Retirement System and Baton Rouge Area Foundation, said Bill Silvia, the LSU foundation’s chief operating officer.

The state committed $5 million to the effort in April 2003, but that money will only be made available by a $10 million match, Silvia said.

Joe Lovett has been tapped as the foundation’s choice as the fund manager, but won’t officially be hired until the fund is operational. He’s managed three such funds, which resulted in 26 startup companies, affiliated with Harvard and other Boston area universities, Lovett said.

"You’ve paved the way with incubators, clusters and the foundation," Lovett told the board, referring to incubators that nurture fledgling businesses and clusters of industries that have been targeted for growth. "What’s missing is venture capital. It’s in its infancy and we hope to pave the way for more of it."

That sentiment was echoed Thursday in New Orleans. Renowned Tulane scientist Dr. David Coy, who has formed the company Synscia to take his cancer drug to clinical trials, has had to travel the corners of the country to find risk-taking investors.

The organizer of the "Biology to Business" conference, Ed Michael Reggie, said the state needs a "bias for action."

Action may be close behind, according to Louisiana Technology Park President Eddie Ashworth.

In about 60 days, Ashworth said, a new fund worth $2 million to $3 million is expected to launch. It would be dedicated to early-stage technology companies and managed by a committee of the state’s four technology parks in Baton Rouge, Lafayette, New Orleans and Shreveport, he said.

The money would likely come from four firms which took advantage of the state’s so-called "CapCo" tax credit program.

At least two other private venture capital firms from outside Louisiana are trying to court local investors and set up offices in the state, Ashworth said. Specific information is confidential, he said.

"Both are trying to raise in the neighborhood of $15 million. They’ve been making pitches to the normal cast of characters," he said.

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