From the issue dated March 15, 2002
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Chasing the RainbowA venture capitalist on the trail of university-based companiesBy GOLDIE BLUMENSTYK Jonah Schnel is a man with a mission. Sitting in a bare-shelved conference room here
One of them is the chairman of electrical engineering, Yahya Rahmat-Samii, who has been at UCLA for more than a dozen years. The other is Emily E. Waldron, the No. 2 in the office that manages licensing of new inventions developed at the university and the creation of spinoff companies. She's been at UCLA for eight years. The two have never met.
"The faculty in engineering have been underserved," Ms. Waldron acknowledges, but now she wants to improve the relationship. Mr. Rahmat-Samii is skeptical. Some of his professors distrust the office's abilities and interest. Can it respond quickly? he asks. Will UCLA pay patenting costs? But before long, Ms. Waldron's assurances appear to satisfy him. "It was eye-opening for me," he tells her. An afternoon of making nice at a university, with no particular deal on the table, isn't exactly how one might expect a venture capitalist to spend his time. But for Mr. Schnel, it's time well spent. His firm, ITU Ventures, invests only in companies based on university inventions in software and telecommunications. It lives and dies on the relationships it can build between technology-transfer offices and departments of engineering and computer science -- and on the relationships those parties can develop with each other. The problematic history at UCLA has created a chasm between the very offices that he most needs to cooperate. Once they trust each other, he says, UCLA could become a bigger player in forming spinoff companies, and ITU will want in on the action. "Ultimately, I need to build that bridge," says Mr. Schnel, "because if I can, we get recognized as the facilitator of that trust." Venture-capital investing is a very different business from what it was just two years ago, during the frothy days of Internet start-ups and skyrocketing IPO's that produced quick profits for little work. Yet it's still one of the important ways entrepreneurial universities and professors get the money they need to create spinoff companies. On campuses, the VC rush has slowed, as, nationally, venture investments fell from $99.6-billion in 2000 to $36.5-billion in 2001. Many venture-capital firms are now focusing their attention and money on shoring up existing investments. And the days of venture capitalists indiscriminately combing campuses to find the next great idea are also a thing of the past. Still, for investors weary or wary of the hype, the fundamentals of university spinoffs -- creative founders with hard, patent-protected technology -- remain attractive. Young, hungry, and well-connected, ITU Ventures set its sights on the university market from its very start. The firm, based in Beverly Hills, Calif., began operating about two years ago with a focus on communications, software, data networking, semiconductors, and optical technologies. With $6.6-million in start-up money from the same financial source that created the now-troubled communications giant Global Crossing (Adam Winnick, an ITU partner, is the son of Global's chairman) and another $29-million raised in December 2000, ITU has enjoyed several big splashes of publicity. Some focused on its use of graduate students and faculty members to help it find promising deals. (Global Crossing filed for bankruptcy in January and is being investigated by the FBI and the Securities and Exchange Commission. Mr. Schnel says those events have no direct effect on ITU.) The VC frenzy has faded, but "prices are cheap now" for investors, says Mr. Schnel, and the determined people who are willing to create companies under those conditions are the kind investors like to put their money behind. Though its record is still unproven, the firm is winning endorsements: Three weeks ago it announced that it had raised $11-million from the Colorado Public Employees' Retirement Association, for a fund that will invest in companies developed by students and professors at Colorado institutions. While some speculate that political connections may have helped seal the deal -- the third partner, Chad Brownstein, is the son of a prominent Denver lawyer -- university officials there say they are thrilled to have a fund devoted to university spinoffs. Mr. Schnel says he and his partners realize they come to the business with some decided advantages for their ages. (Mr. Schnel and Mr. Brownstein both turned 29 last month. Mr. Winnick is 27.) But he makes no apologies. When ITU got its money, "the market was lending to a lot more people with a lot less experience than us," he says. He met Mr. Brownstein during college, at Tulane University. Mr. Winnick, who went to Tufts University, is a childhood friend of Mr. Brownstein's. Other venture-capital firms focus on university spinoffs, but "they're not canvassing campuses" in the systematic way that ITU is, Mr. Schnel insists. Over the past two years, he figures, he has visited at least 15 uni-versities, many more than once, and that doesn't count those close to home. His partners, he says, have probably traveled even more. Last month, Mr. Schnel agreed to have a reporter from The Chronicle shadow him as he made his rounds during four typically intense days in Pittsburgh and in Southern California. Tuesday 2:30 p.m. Snagging a few minutes with Bruce MacDowell Maggs, a computer-science professor at Carnegie Mellon University, is a coup. Mr. Maggs is a founder of Akamai Technologies, one of the certifiable successes of the Internet industry. He's the kind of faculty member who might have some good contacts for ITU, or perhaps future entrepreneurial plans of his own. Though Mr. Maggs's narrow office has a playful air -- it's festooned with a five-foot-long mylar balloon shaped like a blimp -- Mr. Schnel sees that the professor is busy and moves quickly to his spiel: ITU invests only in companies with a university tie-in, he begins, and its specialization in information systems is deliberate. Many of ITU's investors are companies in that field, and ITU uses the expertise of its investors to help vet deals. The firm has raised more than $35-million, he tells Mr. Maggs, and "we're sitting on most of our capital." Warm but a little guarded, Mr. Maggs seems to brighten when Mr. Schnel mentions universities where ITU has already made investments, including Caltech, Berkeley, and Georgia Tech. He warms further when Mr. Schnel reels off the names of some of the 35 computer-science and engineering professors from around the country who, as faculty advisers, help ITU evaluate technologies. He knows an adviser from Berkeley. Mr. Schnel asks about the entrepreneurial climate. Are students and professors still interested in forming their own companies? "There is a feeling that it's much more difficult to raise money now," says Mr. Maggs. Before investing, venture firms want to see more progress than they did a few years ago. What's more, Pittsburgh doesn't have many venture-capital firms. Mr. Schnel flashes a smile. That, he replies eagerly, "is where we see the opportunity." As he does whenever he meets a professor, Mr. Schnel asks Mr. Maggs what he's working on. Mostly electromagnetic technology and small devices, Mr. Maggs replies. "Materials?" asks Mr. Schnel, jotting notes on an embossed, 4-by-9-inch card he has pulled from his soft leather briefcase. The cards, similar to the so-called buck notes used in the entertainment industry, are one of the few "outsider" touches Mr. Schnel displays during these forays into the university world. He wears simple dress slacks and an open-collared shirt. Only his shoes, black leather and fashionably square-toed, betray any aura of California hip. Before leaving, Mr. Schnel offers one more point of connection. He reminds Mr. Maggs that ITU is a major investor in Eizel Technologies, a start-up company founded by three former graduate students at Carnegie Mellon. Mr. Schnel knows Mr. Maggs was an angel investor in the company. Eizel was one of ITU's earliest investments. Its chief product, software that uses artificial intelligence to automatically abbreviate e-mail messages and re-format Web pages on the fly, makes it easier for people using cell phones, pagers, hand-held computers, and other wireless devices to read their e-mail messages and view Web pages on the tiny screens. Mr. Schnel, who spends much of his time on the road hunched over his pager, swears by it. ITU is the lead investor in Eizel, which means Mr. Schnel has been, and will be, spending a lot of time seeking investors to put several-million dollars into the company. A nice chunk of it is already "soft-circled" he assures Mr. Maggs, using banking-industry jargon to describe money committed but not yet signed over. By the time the financing round is completed, ITU will have about $1.5-million in the company. Mr. Maggs smiles. "Thanks for helping to fund Pittsburgh entrepreneurs," he says to Mr. Schnel as the young man heads into the hallway. As Mr. Schnel will tell his partners 48 hours later, Mr. Maggs could be "a good contact for ITU." Tuesday 3:30 p.m. A few minutes later, a floor up, Mr. Schnel gives the ITU pitch again, this time to William L. Scherlis, a research scientist at the Institute for Software Research International. Perhaps this professor, or one of his colleagues, also has research that could lead to a spinoff company. Mr. Schnel hits on some of the same points he made with Mr. Maggs. "We're not a venture capitalist that is standing at the gates of the university saying 'show us your best deals,' " he says. "We're active. We're looking." Mr. Scherlis nods approvingly, and Mr. Schnel turns the discussion to the professor's research. Mr. Scherlis is one of two principal investigators on a new, $23-million NASA grant aimed at making software more dependable. Obviously, he says, that is vital to the space agency -- and important to the commercial sector. If there were a way to measure software reliability, studies show that companies would pay substantially more for the better product. Mr. Schnel pulls out another card and starts writing. ITU has been looking into a company created by a professor at Purdue University that is developing technology to block software tampering. Maybe Mr. Scherlis would want to check into it, Mr. Schnel suggests. He also tells Mr. Scherlis about a big research effort under way at Purdue on software security, and offers the name of one of the professors involved. That reminds Mr. Scherlis of the work of one of his own colleagues, Peter Lee, who has created a company along the same lines. The discussion returns to ITU and the venture-capital market in general, but Mr. Schnel has not forgotten Mr. Lee. "Peter's company? Do you think he'll look to take some outside capital at some point?" he asks as he prepares to leave. Mr. Scherlis doesn't know. The session, says Mr. Schnel, as he steps outside, was a great example of why ITU so enjoys prospecting for business at universities: "No one's hiding anything." His next appointment, with the new dean of the school of public policy, Jeffrey Hunker, yields even more intelligence: a new push in Internet security and a project on data mining. Before leaving, Mr. Schnel offers the services of ITU's in-house analysts and its campus advisers to any professors or students who are thinking about starting companies: "We're here to serve the community as well as serve ourselves." A minute later, Mr. Schnel stands in the building's foyer, head bent, fingers tapping furiously at his Blackberry pager as he scrolls through e-mail messages sent over the past few hours. "Oh, that's good news," he says at one point, his face brightening. One of ITU's portfolio companies has signed a deal with a semiconductor firm. Tuesday 7:00 p.m. That evening, Mr. Schnel meets with Sam Leinhardt, the president and CEO of Eizel, before the executive's night flight to Northern California to meet with potential investors. Intense and direct, Mr. Leinhardt is no stranger to the venture-capital world. A former Carnegie Mellon professor, he started and sold three companies before joining up with Eizel. He says at first he was a bit wary about having this young Beverly Hills venture firm involved. "You want people with financial insight and a Rolodex," he says. ITU is providing both. One quarter of the company's major account opportunities come from ITU contacts, he says. "And if I'm not on it in 10 minutes, I get another phone call." It was different in "the Being There days" of the 1990s, he says. Then, venture money was flowing so freely, companies didn't have to do much of anything to attract investments. "Now it really is work. You must build value," in the form of products and customers to even attract the money, because so many venture capitalists were burned, Mr. Leinhardt says. Venture firms that do have money for seed-stage operations are driving tougher deals, assigning lower valuations to companies so they can get bigger shares of ownership. Mr. Leinhardt says ITU's timing in entering the venture market has helped put the firm in a good position, but he appreciates that "they are not exploiting that position" with Eizel. Wednesday 8:00 a.m. The next morning, over breakfast at the Westin Hotel, Mr. Schnel's oatmeal grows cold as he flicks through more messages on his pager: There's word from a possible investor for Mr. Leinhardt to meet on the West Coast, questions from an ITU analyst evaluating a potential ITU investment in Colorado, and the résumé of an applicant looking to become the chief financial officer at one of ITU's portfolio companies. ITU tries to make its small size an asset. It usually invests a few hundred thousand dollars in a company, and rarely puts in more than $2-million. On deals where a company needs more, ITU helps locate additional investors. If a company in the semiconductor industry needed $3-million, for example, an ideal investment mix would involve $1-million from ITU, $1-million from a semiconductor company, and $1-million from another venture-capital fund that has its own semiconductor investments. ITU's stake would be smaller, but Mr. Schnel says the strategy allows it to have a finger in more pies. The portfolio company benefits as well, because it can tap into the contacts of its other investors. Wednesday 10:00 a.m. Mr. Schnel's first meeting today is with Pradeep K. Khosla, head of the department of electrical and computer engineering at Carnegie Mellon. He is one of ITU's faculty advisers, someone Mr. Schnel and his partners call upon to evaluate a company's invention and tell them whether the idea is technically sound. Advisers also talk up ITU to their colleagues, and tip off ITU to faculty members who might be seeking investments. If one of those referrals becomes an ITU investment, the firm pays the adviser with equity in the company. Mr. Schnel inquires about the impending reorganization at Carnegie Mellon's office of technology transfer. Could there be a role there for ITU? Mr. Khosla thinks so, since the new director there seems eager to involve more outsiders in evaluating the commercial potential of inventions. Mr. Schnel makes a note. He'll be meeting with that director, Robert A. Wooldridge, later in the day. Mr. Khosla talks about his own research interests -- computer systems that, when they hit a glitch, can repair themselves rather than crashing. There could be commercial products from that, he says. He also predicts that some of the research efforts in Internet security could start producing spinoff companies in 18 months. Eizel is also on the agenda again. Mr. Khosla suggests that one of the investors in a spinoff he has founded might also want to invest in Eizel. "Tell Sam to call her," he urges Mr. Schnel. As he steps into the hallway and heads for the steps out of Hammerschlag Hall, the cell phone is already at Mr. Schnel's ear. Mr. Leinhardt, now in California, will get the message on his cell phone as soon as he turns it on. Wednesday 11:00 a.m. His next appointment is supposed to be another pitch to a Carnegie Mellon researcher who is also a founder of a company that develops speech-synthesis technology for computers. But Stephan Mueller, a Carnegie Mellon MBA student who works for ITU, informs Mr. Schnel that the researcher can't make the meeting. Mr. Schnel shrugs: "I get stood up." Now, with an hour to kill, Mr. Schnel pops in on Catherine Copetas, an assistant dean of industrial relations in the school of computer science. Mr. Mueller, calls her the school's "mother hen." She hugs Mr. Schnel and peppers him with questions about his meetings. A minute later, Peter Lee happens by. He is the professor Mr. Scherlis had mentioned the day before. Ms. Copetas grabs Mr. Lee and makes introductions. The encounter is a nice break for Mr. Schnel. He's still curious about Mr. Lee's company and will send a "nice meeting you" e-mail message a few days later, inquiring about a chance to talk. Ms. Copetas's fondness for Mr. Schnel is obvious. It's not just that he's investing in local companies. She likes him personally: "You're Beverly Hills. You bring tasteful clothing," she says playfully, in the tone of an aunt teasing a favorite nephew. Mr. Schnel grins and says goodbye. People such as Ms. Copetas are what keep ITU in the thick of things, and he's grateful. She isn't paid by ITU and says she prefers not to talk about why she likes to help Mr. Schnel. But as he leaves her office that morning, she gives a little away: "It means so much when someone's a nice guy." Wednesday 12:30 p.m. Now the pitch goes the other way. Two grad students, one in the business school, the other in a joint business-computer science program, have created a company around a software product they've designed to help improve the way businesses retrieve and analyze information from databases. Mr. Mueller, who helped connect ITU with Eizel, has arranged for them to present their business plan to Mr. Schnel. ITU may consider them for an investment. Show-and-tell is the first step in the evaluation process. The four meet in a conference room, where Eric Boughner and Weizhen Lin have set up their laptop and PowerPoint slides. As Mr. Schnel and Mr. Mueller dig into their box lunches, Mr. Boughner explains how their database-query product is better than existing ones, and so simple to understand that companies won't need to hire consultants to train people to use it. "Everyone needs data. The problem isn't cheap," says Mr. Boughner. Mr. Schnel, who is familiar with databases, questions the savings Mr. Boughner has projected. "Are these time-based costs?" He also quizzes Mr. Boughner on who might use the product, and is intrigued to hear that someone at a major bank is testing it. He asks for her name and writes it down, then continues to ask questions. How long have they been working on it? When did they finish it? How do they plan to price it? Mr. Boughner says he isn't sure about price. Mr. Schnel offers a suggestion. Since the company is so new, consider offering the product cheap. "You want someone paying, but you want people using it, too," he says. "So let's talk about the business," says Mr. Schnel. Mr. Boughner says his hope is to finance his next few months of operations by finding paying customers. A local biotechnology company is a good prospect. Mr. Schnel says he'd also be happy to have the company present itself to one of ITU's own investors, First Data Corporation, and to a friend of his at a regional telephone company. The new company appeals to Mr. Schnel. "This is the kind of thing you can touch and feel today," he says, and ITU likes to invest very early in a company's life. It would take the first risk and spend a lot of time with the company. "It's really high-level business development," he says, urging the two to talk to Mr. Leinhardt at Eizel for a reference. "We're not out gouging people with terms, even though the market is terrible." He advises them to find a customer who would be willing to vouch for the product, "This sucks, but you're going to be labeled," he says. People will say, "Oh, you're graduate students." He says that even his own partners will be skeptical because of that. He also encourages the two to seek out angel investors in Pittsburgh, a lot of whom "have ties in the Valley." The issue of money comes up just once, and only briefly. Mr. Boughner speculates that the company would need a few hundred thousand dollars between now and May, when he and Mr. Lin graduate, to hire some additional programmers out in California. They part with promises on all sides to stay in touch. Mr. Boughner's not dwelling on money hit the right note. "He's sophisticated enough to know when you're an early-stage business, the VC is going to want to make those decisions," says Mr. Schnel, as he heads to Mr. Mueller's car and the next appointment. Mr. Boughner, reached later, is pleased as well. Having worked for a VC firm himself, the presentation went mostly as he expected. "We were surprised that he offered to help us talk to people" who might use the software without first locking up some kind of deal, he says. Still, he isn't sure whether they'll pursue matters with ITU. He wants to get the business a little further along and then see how some other venture-capital firms react. The company probably doesn't need all that much money, and he would like to avoid taking in too many outside owners too early. "If we could fund it via customer revenue, that would be ideal," he says. Wednesday 2:00 p.m. Mr. Schnel has two more meetings: a base-touching session with the technology-transfer director and a get-to-know-us meeting at Innovation Works, an economic-development agency financed by the state to promote new businesses in southwestern Pennsylvania. "They are a great partner for us," he says of the agency. His spiel goes largely as before: ITU's backing, the advisers, not at the university's gate. As he did with the public-policy-school dean, Mr. Schnel offers ITU's expertise to Innovation Works. In return, he says, he hopes Innovation Works will let ITU know about companies it might want to invest in. "We all want to see the opportunities," he says. That evening, he takes the Eizel team to dinner at Lidia's, a stylish Pittsburgh landmark known for its pasta. In less than 10 hours, he'll be leaving for the flight back to LAX. Thursday 12:30 p.m. ITU's Beverly Hills office makes a statement. It's about the size of a car showroom, with a wall of windows overlooking Wilshire Boulevard. Exposed pipes shine in the factory-high ceilings, and the decor features sleek built-ins made of brushed steel, concrete, and opaque glass. It feels vast for the size of the firm: five other financial professionals and two administrative assistants. Framed copies of articles about ITU adorn its walls, along with framed copies of the certificates describing ITU's major financings. Mr. Brownstein has hung autographed guitars from Kiss and Black Sabbath on his walls; Mr. Schnel's office is more subdued, with movie posters and pictures of his wife and 19-month-old son. Over lunch, Mr. Schnel fills in Mr. Winnick and Mr. Brownstein on his trip. As he predicted, the partners are a little dubious about the student-run company, but Mr. Schnel is enthusiastic. "I was real impressed," he tells them. The Internet-security institute and the NASA grant could also produce opportunities, he tells them. "All in all, it was a good, solid nine." Thursday 4:00 p.m. With some time before his carefully orchestrated meeting between the UCLA engineering chairman and the technology-transfer office, Mr. Schnel stops to touch base with another of the ITU faculty advisers, John Villasenor. He also pops into a laboratory where some grad students are experimenting with ways to improve the use of real-time video compression in moving helicopters, part of a grant from the U.S. Navy. It is yet more of the wooing that Mr. Schnel and ITU are directing at UCLA. And that in turn is part of the firm's larger strategy: to go after universities from San Diego to Santa Barbara. ITU is hoping to create another fund, along the lines of the new Colorado one, to invest in inventions from universities in Southern California. When he started this work, Mr. Schnel says, it became clear to him that many of the engineering professors lacked faith in the tech-transfer office's effectiveness. It's part of the reason so many great inventions went "out the back door," with no payoff to UCLA. ITU makes a point of working inside the system. That helps ensure that there will be no future dispute with the institution over who owns the invention, and it helps keep the firm high in a licensing officer's mind for the next time a potential spinoff comes along. Another venture capitalist might be willing to burn bridges, he says, but "we can't foul the pool that we're swimming in." Ms. Waldron and Mr. Schnel meet for breakfast at least once every quarter, she says, and they talk on the phone even more often. ITU has invested in a UCLA spinoff company called Caotue, and also helped the company raise additional capital in a deal that has yet to be announced. ITU was also one of the first venture-capital firms to commit to a new pool of funds that UCLA is planning to create, to develop a richer mix of venture-capital money for its campus inventors. "If I get a disclosure [of a new invention] and it's hot, he will be the first person I tell," she says of Mr. Schnel. "That's how these things happen." Friday 8:00 a.m. The California Institute of Technology has formed more than 70 spinoff companies since 1995, when the research powerhouse first began getting serious about commercializing its inventions. It also has the money, from an endowed gift, to provide as much as $100,000 to help out a new start-up. But licensing officials here say ITU is helping to fill the void left by the retreat of the venture-capital market. "There was a day when it seemed every other person who walked into my office was just out of college with $100-million" in his or her pocket looking to invest in something, says Richmond Wolf, associate director of the technology-transfer office. Now, venture funds are fewer and farther between. And they're a lot more risk averse. ITU is one of the exceptions. Another is the Athenaeum Fund, named for the Spanish-style faculty club where the fund's investors often dine. Mr. Schnel is having his oatmeal at the club this morning, as a guest of Mr. Wolf and his associate Scott Carter, enjoying the clubby elegance of its dark-paneled dining room, with its ornate ceiling. The venture firms that still have capital are getting more for their investment these days, Mr. Wolf notes, because valuations -- the amount investors decide a private company is worth -- are a lot lower now. The same amount of money that might have gotten a venture capitalist a 25- or 30-percent stake in 2000 would buy a 50-percent stake today. Even so, Mr. Wolf says, he's amazed at the number of VC firms that say they'll invest in early-stage companies but never do. One firm, he says, has looked at seven potential Caltech deals but invested in none. ITU, by contrast, has looked at 15 deals and invested in four. One was created by two undergraduates. Another, which Mr. Schnel will visit later this day, is OEwaves, which has developed a new technology for opto-electronic oscillators, used in wireless, optical, radar, and satellite systems. Caltech values ITU's interest, and it makes sure the company knows when there are deals on the table. "We provide fair and equal access to anyone who wants to come in," he says. Few do. ITU values the relationship, too. With its university focus, it can't afford to miss out on a good opportunity and then have the investment community start asking, "How did you lose that one?" Mr. Schnel says. And he appreciates that Caltech will think of ITU even on deals for companies that could attract bigger investment sums from larger VC firms. "When we get a call from Caltech, it's serious," says Mr. Schnel. In venture capital, the proof of success comes at a liquidation event -- when a portfolio company is sold or goes public through an initial public offering. If the price these buyers are willing to pay is higher than what the investors put in -- and during the IPO frenzy, many were astronomically higher -- the investors profit. But in the sober economic climate of 2002, venture capitalists can't count on fast profits from hyped-up companies with little to show for themselves. Mr. Schnel, just two years into the game, says he expects it will be 18 months to two years from now before the first few of ITU's portfolio companies have enough revenue or profits to be in a position to consider selling themselves or going public. Two of the companies ITU has invested in no longer operate. Over time, he says, ITU might evolve, and perhaps pursue investing in fields other than seed-stage spinoff companies that begin in university labs. But for the foreseeable future, Mr. Schnel says, it will stick to this niche. "No one has a brand name that's recognizable" in this field, he says. ITU wants to be the firm that does. "We're young. We're going to have a lot of years of doing this." A SAMPLING OF OTHER UNIVERSITY-ORIENTED VENTURE-CAPITAL FIRMS ARCH Venture Partners (http://www.archventures.com) The firm, which was founded in Chicago in 1992 as a spinoff of a fund started by the University of Chicago, has five funds totaling more than $700-million. It invests mostly in technology companies with ties to academic researchers, in amounts of $5-million to $10-million per company. Its investments include Adolor Corporation (University of Pennsylvania), a biopharmaceutical company, and Netbot Inc. (University of Washington), which produces Web-surfing tools. Diamondhead Ventures (http://www.dhven.com) Founded in Menlo Park, Calif., in 2000, the firm has total funds of $140-million, up to half of which it will invest in technologies emerging from universities. Its typical investment is $3-million, and its investments include firstRain (Princeton University), which develops filtering tools for Internet users, and Intraspect Software Inc. (Stanford University), which develops Web-based work spaces for business. Dot Edu Ventures (http://www.doteduventures.com) The firm, founded in Palo Alto, Calif., in 2000, has a total of $20-million and invests up to $500,000 in companies started by professors and students at research universities. Its investments include Centrata Inc. (Massachusetts Institute of Technology), which produces management tools for data centers, and Bytemobile Inc. (University of Illinois at Urbana-Champaign), a wireless Internet infrastructure company. RCT BioVentures West (http://www.rctbvw.com) and RCT BioVentures NE (http://www.rctbvne.com) Created by Research Corporation Technologies, of Tuscon, Ariz., to invest in new biotechnology companies. Both BioVentures West, started in 1997 and based in Menlo Park, Calif., and BioVentures NE, created in 1999 in Concord, Mass., are $15-million funds financed by RCT. They concentrate on new technology companies in their regions, many of which have ties to higher education. BioVentures West typically invests $100,000 to $1-million per company; BioVentures NE, $500,000 to $750,000. Investments include: Cyternex Inc. (University of Texas at Austin), a biotechnology company developing gene-targeting anti-cancer agents, and Sedecim Therapeutics Inc. (Boston University), which works with cytokines to develop treatments for HIV infection and asthma.
SETH PERRY
http://chronicle.com Section: Money & Management Page: A28
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Copyright © 2002 by The Chronicle of Higher Education