Wednesday, February 1, 2006
Interview with Jeremy Neilson, Utah Fund of Funds
Jeremy Neilson is the Venture Manager for the State of Utah's Fund of Funds. The fund is investing in venture capital firms who it hopes will evaluate and invest in local Utah firms. The fund recently appointed an advisor, Fort Washington Investment Advisors, to run its program here in Salt Lake.
Techrockies: What is the Utah Fund of Funds?
JN: The Utah Fund of funds is a Utah, state supported economic development initiative. The point of the fund is to help the State of Utah through the program, which is focused on venture capital work. We hope to use the program to bring additional venture capital and private equity funds to evaluate the deal flow here.
Techrockies: Why Fort Washington Investment Advisors?
JN: The process was about a ten month process, where we sent out an RFP to venture firms. We received multiple responses, went through the list, and invited 5 of the top 5 firms to pitch. Narrowed it down to three firms, and then did extensive due diligence, including going to their home base. We liked Fort Washington the most, because of its extensive experience in private equity world. They have been doing deals for 20 years, since the mid 80's, when they were investing their parent company's money. Their parent is Western and Southern Insurance Company. Around 2000, the firm started doing state sponsored programs, and have been investing for those programs for 5 years, which is a good while of doing state sponsored program. We also liked their attitude and willingness to work with us, rather than demanding that we just give them the program and go away. They are going to allow the State, and individuals like myself to be involved in the process as much or as little as we want.
Techrockies: What other states have they managed?
JN: They have managed New Mexico with their program, Kentucky, Cincinnati's city program, and now Utah.
Techrockies: Did you evaluate local firms?
JN: We did not get any RFPs from submissions from local venture firms, or from any other Utah firms.
Techrockies: What's the current timeline look like for investments in venture firms?
JN: Our program is launched, that means we're starting to accept PPMs from the VC community. We're starting to do due diligence, and expect to have our money in the second quarter. We're going to start making investments in the March/April timeframe.
Techrockies: What kinds of VC firms are you seeing interest from, and where are they located – I assume a lot from the Bay Area?
JN: Yes, we're seeing a large number from the Bay Area, but that might just be because that's where they are. It's an easy commute to Utah from the Bay Area. We've also seen some decent attention from Seattle and the Northwest, some from New Mexico, Boston, and New York. The interest is from all across the country.
Techrockies: Why are VC funds interested in Utah?
JN: Utah has always had great technology. We've always produced a handful of great companies every year. VC firms have always come here, with the biggest VC firms doing deals here. Those firms include Benchmark, Kleiner Perkins, and lots of other pedigreed VCs. Lots of people know we have great technology and inventors here. That's why they'd be interested in participating in the program. If they can add investments to their funds, in addition to finding deals it's just a benefit and a boon for them. It's the technology. One last point, is that the program requires that once we make an investment, that the money not be geographically restricted. Funds are not required to invest in the state, all they are required to do is come here and look at the deal flow on a regular basis. It's presence, not so much an office as that they are here often, spending enough time to find deals and build relationships. That's the carrot to the money we invest with them.