A University of Colorado at Colorado Springs professor is putting together what would be the city’s first venture capital fund, to begin investing up to $250,000 each next spring in 20-30 local companies, or in firms that agree to move here.
Thomas Duening, the El Pomar chair in business and entrepreneurship at UCCS, said Tuesday that he can’t start raising money for the fund until its management structure is completed in a few weeks. But he said he is optimistic he can raise at least $3 million from local investors and institutions.
UCCS will be the general partner of the fund, which will be called the Intermountain Fund, and will get 20 percent of any profits the fund generates, he said.
“If we can’t put together a fund of that size in this community, we have a problem,” said Duening, who has been trying to put together the fund’s management structure for about 10 months and will serve as its investment manager, working with a committee of five to seven people to select which companies will get money from the fund. “There is substantial potential upside for the university, but we will have to pick good deals to make that happen.”
The Intermountain Fund, Duening said, will focus on sports and outdoor-recreation companies. The Colorado Springs region, he said, has a “comparative advantage” in its natural amenities, and is home to the U.S. Olympic Committee.
Duening unveiled the fund during a luncheon at El Pomar Foundation’s Penrose House outlining the accomplishments and new programs planned by the El Pomar Institute for Innovation and Commercialization, a 2-year-old group that helps local entrepreneurs turn ideas into viable commercial products. He is one of three UCCS professors whose salaries are paid through a $3.1 million El Pomar grant and carry out the institute’s programs.
The university will be the fund’s general partner because Duening is managing the fund, he said, but the legal issues about whether or how it will invest in the fund are still being sorted out, though he listed the school’s foundation as a possible investor in his presentation.
Before arriving at UCCS last year, Duening spent five years as director of the Entrepreneurial Programs Office at Arizona State University’s Ira A. Fulton School of Engineering, where he launched the Arizona Technology Investor Forum. He founded Insyte InfoLabs India Pvt. Ltd., an outsourcing company in Bangalore, India, that was acquired by AnsrSource Inc. in 2007. He also has been director of the University of Houston’s Entrepreneur and Venture Development Center.
More than a dozen venture funds are based in Colorado and several that manage $300 million or more are based in the Denver area; some of the nation’s largest such funds have more than $1 billion to invest.
Similar venture funds already operate at other University of Colorado campuses, Duening said, to provide funding for companies that are turning technology developed from research at those campuses into commercial products.
The fund’s priorities, he said, will be to first invest in technologies developed at UCCS, then startups with some UCCS connection, followed by other local startups, and finally firms from other areas that agree to move to the Springs.
“We will provide cash for growth that should result in clusters of companies — in particular, industries that bring talent here and create jobs. Through syndication of these investments with other funds, that should become a cash multiplier,” Duening said.
Although venture funds based elsewhere have previously operated offices in the Springs, no fund has ever been based locally and none has ever focused its investments exclusively on startups from the area or that are willing to move here in exchange for an investment. No local companies have received venture capital investments for nearly two years, even as such investments this year have surged in Colorado and rebounded nationwide.
“This is exactly what we need to do. It is one of the important initiatives from an entrepreneurial growth standpoint that we have taken on in many years, and that growth is the most important thing we can do to improve our economy,” said Mike Kazmierski, CEO of the Colorado Springs Regional Economic Development Corp. “The fact that any company that gets money from the fund has to either be from or move to Colorado Springs is very important from an economic development standpoint.”
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