In an effort to strengthen the venture capital network in Arkansas and promote economic growth within the State, the Arkansas Development Finance Authority authorized Cimarron Capital Partners, LLC ( www.arkansasinstitutionalfund.com ), to be the Designated Investor Group for the Arkansas Institutional Fund (AIF).  The AIF is authorized to invest in professionally managed venture capital funds that in turn make risk capital more accessible to promising Arkansas firms.

ADFA serves as the contracting entity, provides balance sheet support for the program and is actively engaged in program oversight. 

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    The investment objectives of AIF in relationship to private equity and venture capital funds include:
 

1. The highest possible risk adjusted rate of return as measured by cash on cash returns net of all fees, expenses and carried interests.
    
2. A reasonable diversification among investments within the total AIF portfolio.
    
3. A limited life structure that aligns fund management, general partner and limited partner interests and goals.
    
4. A distribution policy that returns cash to limited partners as rapidly as possible given the nature of the underlying portfolio.
    
5. An allocation policy that minimizes tax consequences.
    
6. A structure that recognizes AIF's regulated investor status.

        The strategic objectives of AIF in relationship to private equity and venture capital funds include:
 

1. The continuous presence during the term of the investment of the highest quality professional fund management working in the State of Arkansas.
    
2. A positive public image coupled with aggressive deal prospecting and fund promotion in Arkansas.
    
3. The highest level of investment or co-investment in Arkansas projects in absolute terms and in relationship to AIF commitments.
    
   1. An Arkansas project is defined as one having 50% or more of its assets or employees located within the state.
       
   2. Co-investment is defined as an investment by another entity (other than the fund(s) to which AIF has made a commitment) in a project in which the fund has invested at the same time under the same terms and receiving the same benefits as the fund investment.
       
   3. Level of investment or co-investment is calculated by adding the two together.  For example: if a fund makes a $250,000 investment in an Arkansas project and attracts an additional $750,000 in investment(s) from other sources at the same time under the same terms and receiving the same benefits, $1,000,000 is the level of investment or co-investment in the Arkansas project.
       
4. The active addressing of one or more of the private equity and venture capital areas of the risk spectrum in Arkansas, in small and mid-sized businesses and in prominent or emerging state industries.
    
5. A highly cost effective program as measured both by cash-on-cash return to AIF on investments (including total costs and fees to the state) and the impact of the investments on the state economy.

Important Links

Diamond State Ventures
ADFA is a backer and supporter of Diamond State Ventures, a $56 million venture capital fund located in Arkansas, which operates as a federally licensed Small Business Investment Company (SBIC) under the Small Business Investment Act of 1958.  DSV seeks to be a value-added partner in building successful companies in our home state of Arkansas and throughout the Southwest, Southeast and Midwest.  They provide patient capital for these types of opportunities:

• Early Stage companies with revenue
• Expansion Stage companies - internal growth or by acquisition
• Management Buyouts
   

Fund for Arkansas’ Future (FAF)

Jeff Stinson
501-227-7767
www.arkansasfund.com

FAF’s principal office is located in Little Rock, AR.  The fund’s investment focus is on seed and early stage companies throughout Arkansas.  A strong component of FAF’s mission is economic development through the capitalization of companies that have the opportunity for rapid growth and that will create well-paying jobs in the state.  On a very selected basis, other opportunities, including without limitation early stage and possibly expansion stage financings will be considered for entities that have identified a significant market opportunity and need.  Investments often, but not always, will be in technology or biotechnology-related companies.  FAF will not be limited to or necessarily exclude any particular industry.  ADFA’ s $100,000 investment brings FAF’s fund total to $5.25 million. 

Memphis Biomed Ventures II, L.P. (MBV)

On June 30, 2006, A $4 million commitment was awarded to Memphis Biomed Ventures II, L.P. (MBV), a private venture capital firm building a $50 million diversified portfolio of equity investments in high-growth medical device and biotechnology companies.

MBV’s principal office is in Memphis, TN. The firm focuses its investment activity primarily in the Southeastern (including Arkansas) and Midwestern regions of the United States. This capital pledge brings with it a commitment from MBV’s management team to consider all credible deals coming out of Arkansas that fit within its investment parameters. To facilitate this, MBV will organize and maintain a deal origination system in Arkansas which includes an annual screening of UAMS technologies, training lectures for interested technology transfer and academicians in how to commercialize medical technology, introductory events for business people interested in building medical technology companies and an inclusion of appropriate Arkansas technology leaders in MBV’s annual Musculoskeletal New Ventures Conference. In addition, for those Arkansas technology transfer offices desiring it, MBV will provide input on how to package and present what makes for a more compelling investment opportunity to the venture capital community.

MBV anticipates investing in an aggregate of ten (10) to fifteen (15) entities in the health care industry, including medical device and biotechnology companies with a particular interest in companies developing product solutions for musculoskeletal disease. The fund expects to invest at various stages of development from seed and early stage financings to later-stage deals.

Noro -Moseley

Noro Moseley, founded in 1983, is one of the largest venture capital firms in the southeastern United States.   Since its inception, Noro-Moseley has created five limited partnership funds totaling approximately $580 million and has invested in approximately 160 companies.  The company specifically focuses on software communications, infrastructure, security and logistics technologies.  Within healthcare, the firms areas of expertise are in information technology devices.  Tech-enabled business services include business process outsourcing, financial services and technologies.  On April 7, 2008, ADFA invested $5 million in Noro-Moseley's sixth fund which is capitalized at $120 million.  It will invest in 20 to 25 companies in the technology, healthcare and tech-enabled business services industries

Prolog II
For general information:  www.prologventures.com

Prolog Ventures
7733 Forsyth Boulevard, Suite 1440
St. Louis, MO 63105

P: (314) 743-2400
F: (314) 743-2403

On May 19, 2005, the Arkansas Development Finance Authority (ADFA) closed on a $4,500,000 commitment to invest in Prolog II, an early stage life sciences venture capital fund from St. Louis MO. 

Prolog has raised a total of $51,000,000 for their second fund.  Prolog II is a venture capital fund organized to generate superior capital appreciation based on a portfolio of investments in early-stage life sciences companies.  Prolog seeks a balanced exposure to four key life sciences sectors:  biopharmaceuticals, medical technology, agriculture and nutrition, and healthcare information technology.  The key selection criteria will include novel functionality, technical validity, the potential for strong intellectual property positions and large accessible markets. 
 

PETRA GROWTH FUND II
Petra Capital Partners, LLC
3825 Bedford Avenue, Suite 101
Nashville, TN 37215
Tel: 615-313-5999
Fax: 615-313-5990

Petra Growth Fund II with a $160 million in capital to invest, allowing commitments of up to $10 in junior capital per company.

The company has the following investment focus:

• Companies with at least $10 M in revenue and $1M in ebitda at the time of investment

• Subordinated debt and/or preferred stock with current pay;

• Financing expansion, acquisitions, buyouts or recapitaliztion;

• Target industries include:  healthcare, software, business outsourcing, information services and media;

• High growth and high margin companies;

• Control or non-control;

• Sponsored or unsponsored.
   

The fund has currently closed two investments:  Mycroft and T2 Systems. Mycroft is an IT services company, based in St. Louis which targets the identity and access management segment of the market.  Petra Growth Fund II helped finance an acquisition for the company.  T2 Systems is based in Indianapolis and provides software as a service to the parking industry.  In this case Petra provided growth capital.

Petra Growth Fund II is actively seeking new investments and would appreciate any referrals which may fit the investment criteria listed above.

SSM Ventures
SSM Ventures
845 Crossover Lane, Ste 140
Memphis, TN 38117
business phone:  901-767-1131

Little Rock contact:  Ted Dickey, 8800 Ferndale Cutoff, Little Rock, AR 72223
e-mail:  ted@lighthousellc.net  phone:  501-831-1161

SSM Ventures is one of the largest and most experienced private equity firms in the Southeast. Having invested in more than 50 companies across four private equity funds, their successful record is the result of partnerships formed with gifted entrepreneurial managers. Starting with a relationship built on trust, they offer entrepreneur-partners a thorough understanding of the growth company lifecycle and a patient approach to building great businesses.

SSM supports the development of high-growth businesses into market leaders. They invest primarily in expansion and later stage companies and opportunistically in earlier stage businesses where they have industry knowledge. Most importantly, they seek to partner with proven entrepreneurs to pursue large market opportunities with a unique or defendable business model.
 

The National Association of Seed and Venture Funds
The National Association of Seed and Venture Funds is an organization of private, public and nonprofit organizations committed to building their local economies by investing and facilitating investment in local entrepreneurs.

NASVF began in 1993 as an ad-hoc group of practitioners seeking the best models to encourage capital formation in their states, particularly for new technology ventures. These founders continued to meet each year and in 1997 formally incorporated the group as a not-for-profit named the National Association of State Venture Funds. The name was changed in 2000 to reflect the Association's expanding service to local networks of private investors.
 

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