CHAMPAIGN, Ill. – While their vehicle’s name may suggest a remote firm in the hinterlands, the managers of Open Prairie Ventures I believe that the Midwest – Champaign-Urbana, Ill, in particular – will provide as much deal flow as a bustling urban center.
While the twin cities of Champaign and Urbana are surrounded by miles of farmland, investors should not be deterred by their perceived isolation, the area’s proponents say. Together, the University of Illinois and the affiliated National Center for Supercomputing Applications churn out millions of dollars a year in research, which has helped to produce scores of high-tech companies in the region. In fact, Netscape Communications Corp.’s founder Marc Andreessen started out at the University of Illinois, before he had to leave for Silicon Valley to get the funding and support he needed.
Hoping to capitalize on this underserved market, Open Prairie plans to raise as much as $15 million in private capital primarily from Midwestern “institutional quality investors” such as banks and corporations, said General Partner Dennis Spice. The firm, which anticipates a final close by the end of the year, at press time had applied for a Small Business Investment Company (SBIC) license with the United States Small Business Administration (SBA), which could ultimately raise the fund’s size to approximately $45 million.
Mr. Spice expected a $10 million initial close toward the end of March, at which time the vehicle would become eligible for SBIC money and could begin investing. Open Prairie will commit $250,000 to $3 million to seed- and early-stage businesses based on technology developed in the greater Champaign-Urbana region. The fund’s primary focus will be information technology, including software and communications, but it also will invest in medical products, biotechnology, advanced materials and instruments and controls.
The firm has been pleased with its initial fund raising efforts. “The [prospective limited partners] we spoke to have found that our niche is a good one,” Mr. Spice said. “There’s not a lot of seed and start-up money in the Midwest.” Obtaining an SBIC license also helps attract investors by reducing risks associated with the fund, he added.
Mr. Spice, a former pension manager for the State Universities Retirement System of Illinois, Andrew Jones, a former entrepreneur, and James Schultz, an attorney and venture capitalist, make up the firm’s management team.