Invest Nebraska, a 10-year-old private, nonprofit corporation known for its regularÂ business plan competitions, is now funding early-stage startups thanks toÂ the leadership of its first CEO andÂ a pair of contracts with the State of Nebraska.
The May 2011 passage of Gov. Dave Heineman's Talent and Innovation InitiativeÂ put Invest Nebraska in charge of part of theÂ Nebraska Innovation Fund,Â a new, state-financed fundÂ aimed at helping entrepreneurs. The state'sÂ department of economic development also tapped the organization to manage an Angel Sidecar Fund, which emerged as a result of funding from the State Small Business Credit Initiative, a program of the U.S. Department of the Treasury.
Through the Innovation Fund, Invest Nebraska oversees the distribution of $3.7 million by the end of 2013. Investments range from $50,000-$500,000 and must be matched one-to-one by an outside capital source or sources. The Angel Sidecar Fund is the same amount and comes with similar constraints â€“ $50,000-$500,000 and one-to-one outside capital match â€“ but narrows the outside capital requirement to angel funds or individual angels.
With activation of these funds in Oct. 2011, Invest Nebraska began to transform itself from a two-person organization that supported entrepreneurs mainly through competitions to a fully-staffed venture development organization that would search for deals, perform due diligence and deploy capital.
In June, the organization brought on board its first CEO, Mark Crawford (near right), an experienced entrepreneur and investor who also serves as its investment manager. Invest NebraskaÂ has also hired an analyst and plans to hire an associate soon.
"We're in a position now with bringing Mark on board where we can provide some great assistance to (high-growth startups),"Â Invest Nebraska COOÂ Dan HoffmanÂ (far right) said.
Crawford, who moved from Washington D.C. to take the position, estimates that throughout his 15-year career in private equity and venture capital he's completed more than 60 deals, most between $1-10 million. After helping start an investment bank in the late '90s, Crawford sold his ownership in the early 2000s and made the move to SFI Financial, a private equity and venture capital firm. "I had a desire to sit on the other side of the table," Crawford said.
Less than two months into his role at Invest Nebraska, he oversaw the organization's first investment, leading a $1.2 million investment in ScanMed, an Omaha-based medical device company. The organization contributed $500,000 from its Innovation Fund.
"ScanMed is a great example of a high-growth technology company that Nebraska is working to cultivate," Crawford said at the time of the investment.
His role at Invest Nebraska is to find more opportunities like ScanMed, regardless of industry.
"My goal is to â€¦ take a look at as many deals as possible to fund and get as many companies into our funnel that I think we can help â€“ maybe not with capital, but with some strategic advice, mentorship â€“ so later on either Invest Nebraska or the Nebraska Angels or Dundee (Venture Capital) can capitalize those organizations," Crawford said.
Crawford is theÂ first Omaha-based employee of Invest Nebraska, which has its headquarters in Lincoln.
Investments the organization makes are either in exchange for equity or as convertible notes. Any money that comes back to Invest Nebraska, Hoffman said, will be held by the organization and used for future investments.
"We (would) want to deploy that capital in deals ready for investment," Hoffman said, noting it's the organization's goal to become self-sustaining.
Credits:Â Photos courtesy of Invest Nebraska.