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State of KY venture funding

June 3, 2008

Today’s Post is my interview with George Emont. He is a partner with Triathlon Medical ventures and managing partner with the Kentucky Seed Capital Fund.

1) Tell me about the state of venture investing in Kentucky?

The good news is that there is more venture capital activity in Kentucky especially at the earliest stages, than there ever has been. That said, we are behind several of our neighboring states in terms of the availability of capital.  Several of the efforts in Kentucky to generate early stage funds are dwarfed by efforts in Ohio and Indiana for example. On the positive side, we have some better state programs that help to support these early stage companies (such as the SBIR matching program). There is still a need for more capital to support companies as they develop. The efforts that my funds have made to support local companies and to develop investment syndicates that bring in money from out of state have made a difference, but are just a start.  As a side note, remember that my funds only invest in health care, with an emphasis on technology companies (e.g. biotech, diagnostics, pharmaceuticals and medical devices) and so my perspective from looking only at the health care sector.

2) What trends do you see among startups in Kentucky, strengths, weaknesses?

Again, realizing that I am focused on health care technologies only, I see some encouraging trends. The raw material for our companies, basic research being performed at our universities, is of high quality and has been increasing. The significant positive impact of the “Bucks for Brains” program is evident. The lack of continued funding of that program over the last four years (with the exception of some funding for facilities), has halted the upward trend of research dollars from the National Institutes of Health that are coming into Kentucky, and actually caused a decline since a couple of years ago. The current state budget includes a small amount of renewed funding for the program and I would encourage additional support in the years to come.

With high quality research and some early stage capital available there is the opportunity for generating exciting businesses here.  One significant weakness that we confront is the need for experienced executives in the health care technology sectors which historically have not been common in Kentucky.  In the next couple of years we hope to demonstrate that it is possible to recruit this talent into our state to run these exciting companies.

3) You manage both Triathlon medical ventures and the KY seed capital fund; tell me about the opportunities that would be of interest for each fund?

The Kentucky Seed Capital Fund invests only in health care opportunities, broadly defined. This includes health care services, health care IT, as well as the health care technology areas I mentioned above (medical devices, biotech, pharma, and diagnostics). We do not invest outside of health care as the career experience of the managing partners is only in health care and we believe that we can both best evaluate these opportunities and also add the most value to companies that are developing products and services in markets that we know. Triathlon invests in the health care technology sectors I have previously mentioned (this does not include health care IT or services).  We look for product opportunities that have strong intellectual property protection, that solve problems and which are not just incremental improvements on the current therapies or products in the market.

4) Commercialization of University research is a hot topic on campuses here in Kentucky especially life science related research, what do you see coming from this area in the next 5-10 years.

As mentioned before, I believe that continued funding of the Bucks For Brains program in critical for Kentucky.  Both UK and U of L have very strong programs that can generate interesting investment opportunities. In addition, with the new pharmaceutical manufacturing facility at Coldstream and the new nanotechnology clean room at U of L, we have state of the art facilities that companies can use in their early stages to advance their products without having to build out their own specialized facilities.  I believe that if the state continues to work toward developing additional sources of capital, Kentucky has the opportunity to create many exciting and successful companies. We are in a competitive environment, and it is easy for a start-up company to decide to locate across the border where resources may be more plentiful.  Kentucky needs to make sure that it competes effectively so that the companies will both start here and stay here.

Written by Richard Stump · Filed Under Blog, Venture Capital 

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