DMN: NTEC launches program to find venture capital for Dallas-area firms

Tuesday, July 27, 2010

By SHERYL JEAN / The Dallas Morning News

Frisco business incubator NTEC Inc. launched a new program Monday with 10 mostly out-of-state venture capital partners to reinvigorate investments in Dallas and beyond.

NTEC's Venture Alliance Partner Program is designed "to address the burning need in the region by companies that have been struggling so mightily to attract venture capital," said NTEC executive director Larry Calton. "And we want to bring in the venture capitalists and show them there are good deals here in Texas."

The venture partners, including one Dallas firm, will meet with entrepreneurs during "office hours" at NTEC from two days a month to two days each quarter. Any company in the Southwest can apply to the program.

Seven-year-old NTEC, which provides office and lab space and support services to medical and clean technology companies, will help identify and screen companies and coordinate meetings with investors. Southern Methodist University business students will help with due diligence and market research of applicants.

"Most of our companies here fall into the $2 million to $3 million range," and that's too small for many venture capitalists and too big for many angel investors, said NTEC senior director Hubert Zajicek. The 10 venture capital firms invest in medical technology and biotechnology, and they've invested in Texas before or want to.

U.S. venture investments have improved this year, but Dallas dollars remain dismal.

Dallas-area venture capital investments fell 47 percent to $68.1 million in the first half of this year from the same year-ago period, based on data from PricewaterhouseCoopers. Investments in biotechnology and medical devices have risen but are still small: $12.1 million for the first half of this year, compared with nothing at all last year.

"There is a glaring dearth of institutional capital throughout Texas, including Dallas," said Alan Ying, a general partner with Louisville, Ky.-based Chrysalis Ventures, an NTEC partner. "The odds are just less likely to have institutional capital invested in companies without a local presence. We see opportunity in that."

Ying, who opened a Chrysalis office in Houston in April, hopes the NTEC partnership exposes the venture firm to more "local entrepreneurs working on exciting opportunities." Chrysalis, which has invested in one Dallas company, is investing from a $175 million fund raised in 2008.

Dallas-based Sevin Rosen Funds was NTEC's first partner.

"It gives us more reach and an opportunity to work on medical technology projects," in Far North Dallas, said Sevin Rosen general partner Jon Bayless. "They're reaching out to folks that we wouldn't see and they have unique laboratories that we wouldn't have access to otherwise."

NTEC eventually hopes to attract more venture capital partners and some strategic partners, also known as corporate venture capital, to the program, Calton said.

One of those partners might want to help NTEC start its own venture capital fund, he said.

Article: http://bit.ly/DMN-NTECVentureAlliance