Welcome to the Texas Coalition for Capital's quarterly e-newsletter. We are a non-profit, statewide coalition of leaders supporting economic development and job creation through long-term access to capital for Texas entrepreneurs and small businesses.
In each newsletter, we highlight Texas' dynamic investment infrastructure, recent investments, and the spectrum of funding sources available to our small businesses. Texans are innovators, and the infrastructure we are seeing come to fruition - connecting companies and capital - is no exception.
We are a resource for promising young companies, entrepreneurs, investors, economic developers, universities, and other stakeholders in the deal flow chain. The Texas Coalition for Capital hopes to work with you to keep Texas the most vibrant business climate in the country.
With best regards,
Craig Casselberry, President
Texas Coalition for Capital
Welcome New Coalition Members!
John Gilully - DLA Piper
Joyce Hellums - Ernst & Young
Advisory BoardChairman, Tom Kowalski
Texas Healthcare & Bioscience InstitutePresident, Craig Casselberry
Quorum Public AffairsDan Matheson
Matheson Law PartnersJeff Clark
Tech AmericaLarry Peterson
Texas LyceumPike Powers
Fulbright & JaworskiDamon Rawie
Advantage Capital PartnersSteven Anderson
West Texas Coalition for Innovation CommercializationJames Arie, Ph.D.
University ot Texas Medical Branch-GalvestonCurt Bilby
Terapio LLC Susan Davenport
Greater Austin Chamber of Commerce/Central Texas RCICGuy Diedrich
Texas A&M UniversityYork Duncan
Texas Research Park FoundationMichael Dwyer
Azaya Therapeutics Inc.Sloan Foster
Digital Convergence InitiativeEric Fox
Lockheed MartinFernando Gonzalez
Rio Grande Valley Regional CICNeal Iscoe, Ph.D.
University of Texas-Office of Technology CommercializationMartin Lindenberg
AlphaDEV LLPMike Lockerd
North Texas Regional CICAndrew Nat
Texas Life Science Regional Center of InnovationBeto Pallares
El Paso/Trans-Pecos Regional CICJim Poage
Satai Network/South Texas Regional CICBrian Hermann
University of Texas Health Science Center San AntonioBob Prochnow
Gulf Coast Regional CIC Terry Schpok
Akin Gump Strauss Hauer & Feld, LLPBrent Sorrells
TECH Fort Worth Dennis K. Stone, M.D.
University of Texas Southwestern Medical Center Mark Ellison
Texas A&M University Sara Patuel
The University of Texas/TechBA Program Jacqueline Northcut
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InCube spin-offs relocating to San Antonio will get $9 million from Texas
San Antonio Business Journal
Texas Gov. Rick Perry has confirmed Tuesday that the state will invest $9.2 million from its Texas Emerging Technology Fund into a trio of companies spun out of InCube Labs. The three companies - Corhythm Inc., Fe3 Medical Inc. and Neurolink Inc. - plan to relocate from California to San Antonio. Corhythm will receive $3.1 million from ETF for the development of an implantable treatment device that detects early onset of atrial fibrillation and chronic heart failure. The device uses recent advances in semiconductor technology and materials science to monitor pacing and defibrillation data to deliver targeted drugs when an atrial fibrillation is detected. Fe3 Medical will receive $2.8 million for the commercialization of a drug delivery technology that enables the safe, non-toxic transport of approximately 10 milligrams of iron across the skin for those who suffer with iron-deficiency anemia. Approximately 30 to 40 percent of the 24 million Americans who suffer from iron-deficiency anemia are unable to tolerate oral iron supplements. Neurolink will get $3.2 million from ETF that will be used toward the development of an implantable device that predicts seizures and treats the underlying disease through intracranial drug delivery. The Business Journal reported on Sept. 24 that sources in Austin and San Antonio had confirmed that Perry planned to be in San Antonio today to make an announcement related to ETF money for InCube companies. The governor's office says the three companies are discussing the possibility of collaborating with the Institute for Preclinical Studies at Texas A&M University to develop their respective treatments. "Texas continues to be a leader in jobs, innovation and technological development, thanks in part to investments through the Texas Emerging Technology Fund, which have attracted top researchers and cutting-edge companies to the state," Perry says."InCube's three spin-out companies have the potential to develop ground-breaking treatments for some of the most common and most challenging medical conditions we are faced with today," he adds. "The investment from the Texas Emerging Technology Fund completes a very strong partnership between the city, county, state and InCube Labs," says San Antonio Mayor Julián Castro. "At the end of the day, this collaboration will boost our growing bioscience profile and create jobs in San Antonio." InCube is based in California. The company, which was founded by California entrepreneur Mir Imran, is expanding its operations to San Antonio where it will seek to launch new biosciences companies. The ETF is a $200 million initiative created by the Texas Legislature in 2005 at the governor's request. It was reauthorized in 2007 and again in 2009. A 17-member advisory committee of high-tech leaders, entrepreneurs and research experts reviews potential projects and recommends funding allocations to the governor, lieutenant governor and speaker of the House. Since being launched, the ETF has allocated more than $169 million in funds to 117 early-stage companies, and $161 million in grant matching and research superiority funds to Texas universities.
Austin Tech Council heads new direction
The Austin Technology Council is going upstream and refocusing its efforts on the professional development of local tech executives.
ATC officials said the organization - which has changed its chairman, six board members and its president in the last year - is refashioning itself as a place where executives can exchange best practices and support local expansion-stage companies. The 18-year-old group decided last month to put a greater emphasis on forums and training programs, such as a CEO boot camp, to fuel the tech industry in Central Texas. "The challenge I saw in town is: You raise $5 million or $10 million in capital, how do we get expansion for people to know what to do?" Chairman Joel Trammell said. "To me, that's the opportunity for the ATC. What we need are businesses that continue their growth past the venture capital stage." The new approach is expected to increase the group's number of member companies from nearly 200 to about 350, said ATC President Julie Huls, who took the position in October 2009. Local tech leaders want a safe place to trade information such as hiring trends and expectations, Huls said. "I think they're looking for strategic growth resources," she said. "It was time for the organization to take a look at what the market really needed."
The ATC, which was founded in 1992 as the Austin Software Council, is a nonprofit group promoting the local technology industry. It changed its name in 2002. During 2008, the latest year for which figures are publicly available, ATC's revenue reached $347,461, but it reported a $4,600 operating deficit, according to a filing with the Internal Revenue Service. Austin has already developed a substantial support system for nascent technology companies. Organizations such as the Austin Technology Incubator, Door64, TiE Austin, the Austin Chamber of Commerce, the Rice Alliance, Bootstrap Austin, Capital Factory and Tech Ranch Austin are available to fledgling entrepreneurs.
Although the area's once-leading funding source, Austin Ventures, has shifted its investing away from startups to growth equity deals, several groups such as the Central Texas Angel Network have stepped in to fill the capital needs of local startups. In addition to the move toward serving more tech executives, the ATC plans to collect and distribute more industry data to its members, Trammell said.
It also wants to make its members' expertise available to local nonprofits to raise ATC's profile.
Trammell, previously a co-founder of NetQoS Inc., is CEO of CacheIQ Inc., an Austin-based data storage company that in July bought the intellectual property of Storspeed Inc. He replaced Brian Wong as chairman three months after the Austin Business Journal reported that the ATC gave its previous president hefty raises over three years and in 2008 paid her nearly a third of its revenue while the group operated at a deficit amid sharply declining revenue. ATC's leaders expect the organization's new approach to encourage cross pollination of ventures. As a result, strong midsize and enterprise-level companies would be positioned to spawn young entrepreneurs and nascent companies to diversify the tech landscape in Central Texas, said board member Larry Warnock, the CEO of Phurnace Software Inc. before it was acquired in January by BMC Software Inc.(Nasdaq: BMC). "By having a larger, healthier tech segment, Austin fuels the growth of smaller startup companies," he said. "It shows that Austin is no longer a wannabe tech town
Texas CAPCO investment retains jobs in San Antonio, positions Alamo Hospice for growth
November 18, 2010 11:05 AM Eastern Time
SAN ANTONIO--(EON: Enhanced Online News)--Advantage Capital Partners, a leading venture capital and small business finance firm, has provided $3.3 million in financing to Hospice Partners of Texas. The funding, raised in connection with the Texas Certified Capital Company (CAPCO) program, will allow the company to expand through the acquisition of Alamo Hospice, maintaining 70 full-time staff and a dozen part-time staff in the San Antonio region. Further growth is expected in the coming months, as Hospice Partners intends to expand Alamo Hospice and create additional jobs.
"The hospice industry is currently experiencing tremendous growth due to many factors, including an aging baby boomer population; increased acceptance of hospice care by physicians, patients and their families; higher usage rates; and pressure to move toward more cost-effective care." "Advantage Capital is pleased to support Hospice Partners in their effort to provide caring, quality hospice services to terminally ill patients in Texas," said Les Alexander, senior vice president at Advantage Capital. "This Texas CAPCO program funding will enable Alamo to retain good jobs in San Antonio, with additional growth expected as the company expands and offers hospice care to more patients."
Gary Merchant, CEO of Alamo Hospice, noted that quality hospice care is in high demand. "The hospice industry is currently experiencing tremendous growth due to many factors, including an aging baby boomer population; increased acceptance of hospice care by physicians, patients and their families; higher usage rates; and pressure to move toward more cost-effective care."
San Antonio-area legislators welcomed the news of the CAPCO investment. "Public-private economic development partnerships like the Texas CAPCO program enable funding for local entrepreneurs and promising companies. This investment brings needed capital to a critical resource for our city and state," said State Senator Leticia Van de Putte (D-26).
Alamo Hospice provides its services to terminally ill patients with cancer, AIDS, emphysema, heart failure and other life-limiting illnesses. Hospice services allow patients to be taken care of in the comfort of their homes, rather than in the hospital. Hospice is a comprehensive approach to providing end-of-life care, with a focus on patient comfort ensuring that the final stage of life is satisfying for the patient and their family. The goal of hospice care is to relieve pain and other symptoms, rather than offer curative medical care.
Advantage Capital's investment in Hospice Partners of Texas was made in connection with the Texas Certified Capital Company program, which encourages the flow of investment capital to promising companies located in the state. The companies, in turn, develop innovative technologies and services, create jobs, and increase economic activity throughout their communities.
About Advantage Capital Partners
Advantage Capital Partners is a leading venture capital and small business finance firm focused on providing growth capital and other investments supporting state and local economic development efforts. The firm's typical forms of investment include early stage, expansion equity, mezzanine financing, senior and subordinated loans and government-guaranteed lending. With offices and partners in Austin, New Orleans, St. Louis, and other U.S. cities, Advantage has raised more than $1.3 billion in institutional capital since 1992 and invested in companies located in geographic areas underserved by traditional capital.
About the Certified Capital Company program
Advantage Capital Partners is a leading participant in the Certified Capital Company (CAPCO) program, a state economic development tool designed to strengthen state economies by stimulating the flow of investment capital to local small businesses, creating high-paying jobs and increasing state tax revenues. In Texas, the state Comptroller of Public Accounts implements and administers the CAPCO program through the Texas Treasury Safekeeping Trust Company. The CAPCO program supports economic development and generates tax revenues for the state through business growth and job creation. The latest report from the Texas Comptroller shows a thriving CAPCO program in Texas, with the participating CAPCOs having invested more than $86 million and enabling the retention of 958 jobs and the creation of 690 jobs
Advantage Capital Partners
Ryan Winkler, 314-725-0800
Cancer Prevention & Research Institute of Texas fosters research while supporting startups
For the Austin Business Journal by Christopher Calnan
The Cancer Prevention & Research Institute of Texas has done more than provide money for cancer research during its first year of operations. The Austin-based organization is also fostering collaboration and filling the capital gap between the seed funding provided by angel investors and investments by early-stage venture capital firms.
In recent years, that gap has grown as VC firms have grown wary while the opportunities to exit investments with liquidity events such as initial public offerings or acquisitions shrink. And while the Texas Emerging Technology Fund has filled that void to some extent, in biosciences, where the road to revenue is usually long and expensive compared with information technology, the benefits of the additional time and money that CPRIT grants afford local companies is difficult to measure.
Companies like Austin-based Mirna Therapeutics Inc., however, provide a clear indication that CPRIT funding has enabled private-sector research that might otherwise have been slowed or abandoned.
Mirna, which is developing therapies to block genes that can trigger cancer, was initially incubated and funded by its sister company, Asuragen Inc. But the cost was running to $3 million a year. A $5 million ETF grant and some Small Business Innovative Research grants from the National Institutes of Health kept Mirna going.
In June, CPRIT awarded the company $10.3 million, a grant that Mirna Chairman Matt Winkler said avoided the "valley of death," meaning the capital gap in which companies can die on the vine.
"We would have been in big trouble," he said. "We would have stalled."
In 2007, Texas voters authorized the state to issue $3 billion in bonds to fund CPRIT. Its goal is to fund cancer research while improving access to prevention programs and services in Texas. Many of the research grants will fund projects bringing together teams of scientists at leading Texas institutions.
It's been one year since CPRIT was launched, and the organization is expected to award $300 million a year for 10 years. It invested $216 million in 155 companies and organizations during its first fiscal year that ended Sept. 16.
Last month, CPRIT started its second year by investing $40.3 million in 52 research grants and 13 Texas institutions. The organization plans to award $216 million in grants during 2011.
It's probable that the capital gap will exist to some extent even after the recession wanes and the window for IPOs opens wider for VC firms to generate more capital. If so, there will still be a need for CPRIT and other such funding options for the long-term research needed for cancer prevention, said Cindy WalkerPeach, director of biosciences at the Austin Technology Incubator.
"It's more acute now than in the past, and it will be around for a while," she said. "It's probably going to be a permanent shift."
Besides awards for prevention programs and services, CPRIT funds research and commercialization. The goal of the company commercialization awards is to finance the development of products, services and infrastructure that would affect patient care.
Of the 85 companies that applied, three companies - all based in Austin - received awards. That all three are local is coincidental, CPRIT Chairman Jimmy Mansour said.
CPRIT is structured to be geographically agnostic. Many application screeners are outside Texas to ensure objectivity. The approach is designed to take a longer view rather than focus on a specific period.
"We don't do quotas," Mansour said. "You never know in any given year the quality of the proposals you'll have."
In July, CPRIT awarded grants of $142 million to organizations across the state, including three Austin-based companies: Mirna, Apollo Endosurgery Inc. and Rules-Based Medicine Inc.
Apollo has developed new surgical devices for endoscopic removal of lesions in the colon, esophagus and stomach. Rules-Based Medicine - which is developing tests in the early diagnosis, prognosis, monitoring and treatment of cancer - is one of only three venture-backed Austin companies to register for an IPO this year.
In addition to the capital gap, CPRIT has fostered increased dialogue between researchers, companies and institutions. That dialogue, coupled with the funding, has become an important part in CPRIT's progress and ability to attract companies to Texas, said Craig Benson, CEO of Rules-Based Medicine.
"It's really a collaborative effort that they facilitate," he said. "It was possible [before CPRIT] that you could go through a whole career in one [research] institution and not talk to each other."
UT Austin recruits Silicon Valley entrepreneur as new chief to boost commercialization efforts
Richard A. Miller, M.D., a veteran biotechnology entrepreneur from Silicon Valley, has been named chief commercialization officer and research professor at The University of Texas at Austin. Miller will oversee the university's Office of Technology Commercialization, with an emphasis on creating new ventures and startups based on discoveries made at the university. One of his top priorities will be to create new venture models that address the growing funding gap between discovery and commercialization.
"Dr. Miller possesses a unique blend of attributes, having succeeded as an entrepreneur, researcher and clinical oncologist," UT President William Powers Jr. said in a statement. "He has created and managed successful companies in addition to building strong academic relationships. We are delighted he is joining us."
"I am honored to join one of the largest and most respected universities in the nation," Dr. Miller said. "It's an extraordinary opportunity to work with The University of Texas at Austin's world-class faculty to translate breakthrough technologies into innovative new products and services." The challenge, he said, will be to come up with new models for commercialization that involve providing the startup money and management skills required to move promising technology from the laboratory bench into the commercial world.