Who says Utah is a tough place to raise venture capital?

Almost everyone, frankly, but Utah Ventures is doing its best to quash that long-running complaint of local entrepreneurs.Launched in 1986, Utah Ventures and its co-general partners Allan Wolfe and James C. Dreyfous have invested more than $3 million of the $10 million it currently manages to boost start-up and high-technology companies in Utah.

At its annual meeting Friday, some 40 partner investors reviewed the companies in Utah Ventures portfolio, including GenMark Inc., the most recent recipient of funding by the firm.

GenMark is pioneering work in animal genetics, Dreyfous said. Technologies in the field have emerged from recent advances from research at the University of Utah's Howard Hughes Medical Institute.

"GenMark's potential in moving genetic technology into the agribusiness marketplace makes this company one to watch," said Dreyfous. "Their process could very dramatically and positively change livestock breeding and disease prevention."

He said GenMark will initially focus on the dairy industry where there is an annual potential market of $2.2 billion in animal turnover.

Utah Ventures also recently participated in new equity funding for several companies already in its portfolio, including Clyde Inc., Sleep Physiology Services and Voxel.

Dreyfous said Utah Ventures will continue focusing its efforts on Utah companies both financially and with managerial expertise. About half of the capital funding it supplies comes from Utah investors, including a variety of local financial institutions.

Usually, people looking for start-up capital can't get loans from traditional banking sources because of the high risk factor inherent in such operations. That's why Utah Ventures exists, said Wolfe, to act as a conduit for investments that can't be made through normal channels.

"The unique value of venture capital is that the investment doesn't succeed unless the entrepreneur succeeds," he said. Conversely in a traditional loan, backed by collateral, the lender makes money even if the business fails.

The stereotype venture capitalist is a lone wheeler-dealer who has a lot of money and an adventurous spirit, a gambler who will roll the dice with a number of start-ups - most of them doomed to failure - in the hopes of hitting it big with the next Novell or WordPerfect.

The premise of going with high risk for the chance to hit it big is accurate, agreed Wolfe, but the providers of the capital are more often such "high flyers" as pension funds, insurance companies and banks, all of whom set aside a small portion of their investment portfolio for high-risk ventures.

"The larger capital firms rarely have individual investors any more, it's become too big for that," said Wolfe. Nationwide, he said, providing venture capital has evolved into a $30 billion industry.

The high risk of venture capital doesn't mean you throw money at anything, cautioned Wolfe. "We are very selective," he said. Still, most start-ups look good going in, it's hindsight that reveals the folly. In fact, the nature of the venture capital business is such that if a portion of the businesses financed don't fail it means the company is being too conservative in its funding . . . and they'll hear about it from their investors.

The idea is that the successes will produce returns so spectacular that they will more than offset the failures.

Considering the failure rate of loans made by many mainstream financial institutions in recent years - requiring the massive S&L bailout, for example - one might ask if their loans are really any "safer" than those made by companies like Utah Ventures. Wolfe doesn't think so.

"The fact that we admit we are in a risky business is more realistic in view of their track record. Our success rate is better and our failures are only about as bad."

Utah is a very attractive market for venture capital, said Dreyfous. It's problem is that, unlike California's Silicon Valley for example, it doesn't have a long and successful track record. He and Wolfe hope to help change that.