Venture Capital Investment Background
The KBA initiated plans to significantly increase the availability of bioscience venture capital funding in Kansas when it published a request for qualifications (RFQ) in late 2008 inviting submissions from qualified and experienced venture capital funds interested in working with the KBA. Twelve venture funds responded to the RFQ.
In order to professionally evaluate the 12 funds, the KBA initiated a request for proposals for qualified financial managers and, from that process, engaged a third-party firm to conduct an independent, comprehensive evaluation of each fund and the confidential information provided to the KBA. That third-party firm was Ennis Knupp, whose private equity evaluation team is nationally recognized. Additionally, Ennis Knupp’s existing knowledge of the KBA from its role as the KBA’s financial advisor allowed it to quickly begin its evaluation, and it had no conflicts with any of the firms that responded to the RFQ.
Ennis Knupp used the rigorous evaluation criteria defined by the KBA in its RFQ, including track record as a priority, and also experience of management, investment strategy, commitment to locate in Kansas, knowledge of the Kansas marketplace, the funds’ proposed terms and conditions, and other confidential information provided to the KBA by the respondents to the RFQ. Ennis Knupp presented the due diligence process it would use to evaluate the 12 applicants to the KBA board of directors during its May 2009 meeting. In addition, the KBA staff met with each of the venture funds that responded to the RFQ, with two objectives: 1) to get to know each firm and its investment thesis by sector and stage so we can source Kansas investment opportunities to the most appropriate firms and (2) to share information about Heartland BioVentures’ approach and services to get companies venture-ready.
At the KBA’s June 2009 investment committee meeting, Ennis Knupp provided a detailed assessment of each of the 12 funds, including a ranking of the firms according to the KBA’s evaluation criteria. After in-depth discussion, the investment committee created a prioritized list of eight candidate firms on which it desired to focus during the next phase of the selection process. Those prioritized firms were invited to give a presentation detailing their qualifications at future investment committee meetings.
The investment committee met individually with each of the eight venture firms it prioritized in its June meeting. After completion of these meetings, the investment committee met to discuss all of the firms and identify which it believed are best suited to achieve the KBA’s growth fund objectives. Upon completion of its evaluation and deliberations, the investment committee voted unanimously to recommend to the full KBA board commitments in eight funds.
On October 8, 2009, the KBA board of directors unanimously approved commitments to invest with the following venture capital firms (listed alphabetically by commitment size):
- Burrill & Company, San Francisco, CA, $10 million
- MPM Capital, Boston, MA, $10 million
- IN Partners / MidPoint Food & Ag, Carmel, IN, $5 million
- Meadowlark Venture Partners, Chicago, IL, $5 million
- Midwest Venture Partners, Chicago, IL, $5 million
- Open Prairie Ventures, Olathe, KS, $5 million
- Prolog Ventures, St. Louis, MO, $5 million
- Triathlon Medical Ventures, Cincinnati, OH, $5 million
Together, these funds provide a range of expertise in the bioscience sectors in which Kansas has existing strengths: animal health, bioenergy, biomaterials, plant biology, and human health. Working with multiple funds also exponentially expands the venture capital network focused on bioscience companies at varying stages of development in Kansas and provides the greatest assurance of increased venture capital flow into the state.