Cash could flow by July into venture capital fund

A few people who are bringing to life a new state "fund of funds" to spark venture capital investment in Utah said Wednesday that money could be flowing by July 1, the first day allowed under the legislation creating the fund.

The Utah Venture Capital Enhancement Act, passed during the 2003 general session and amended with a later special session, calls for the creation of the fund of up to $100 million from private sources to invest in a variety of VC funds committed to working with and investing in Utah high-growth ventures. The state would protect investors from a loss by issuing contingent tax credits — up to $20 million annually — if investors do not receive a 5 percent to 6 percent return on their investment in Utah companies.

The "fund of funds" eventually would reach $100 million through the excess above the return to investors.

Act supporter Will West, president and chief executive officer of Control4, credited the Utah Department of Community and Economic Development with getting elements of the fund in place.

"The big hurdle at this point is getting that professional (fund) manager hired and starting to collect the investment dollars, but the target is to pull the trigger and have this fund be ready to start investing money by July 1," West said Wednesday during the annual convention of the Wayne Brown Institute.

The five members of the Utah Capital Investment Board have been named, and the formation of the Utah Capital Investment Corp. is in the nomination process.

The ultimate goal is to create a climate that will boost venture capital investment in Utah companies and attract venture funds to the state.

"The intent is to have this $100 million available for venture capital companies that are serious about looking at deals in Utah — not forcing you to invest in Utah but to look at deals in Utah," West said. "And we're certain that if you do that, you're going to end up spending a little bit of money here."

David Harmer, executive director of the department, said the criteria for making investments will be driven by what VC firms are willing to do to commit to Utah.

"We know that it wouldn't work if we went out and said, 'If we put $10 million into your firm, you have to invest that whole $10 million in Utah companies.' We can't do that because we would be one partner here among others," he said.