Biolex, Inc., was little more than a patent on a collection of proteins from Dr. Anne-Marie Stomp's forest genetics lab when Centennial Venture Partners made the NC State spin-off its first investment in October 1998. Generating proteins from a fast-growing aquatic plant known as duckweed, the Pittsboro-based company now employs about three dozen people and has signed agreements with drug companies like Bayer to incorporate the proteins into new medicines for blocked arteries, rheumatoid arthritis, and other ailments.
Early financial support from Centennial Venture Partners--now known as the Academy Centennial Fund--has been critical to the success of NC State's technology transfer model in spurring the growth of University spin-offs like Biolex. "It's hard to form a company and get it off the ground without initial seed funding," says Glenn Kline, Academy managing partner. "NC State has excellent intellectual property, but the pre-seed stage is generally viewed as too early for most venture capital firms to invest in spin-offs."
Rather than allow the technology produced in its labs to sit dormant for lack of early-stage capital, NC State officials took the bold step of creating the $10 million venture fund six years ago--a time when only one other university had a venture fund dedicated to providing seed money to university start-up companies. "NC State showed a lot of initiative to recognize the possibilities here," Kline says. "A venture capital fund like this stimulates entrepreneurship, supports additional sponsored research, and provides an arena for NC State graduates to participate in the growth of the fund's portfolio companies."
The Academy Centennial Fund has invested in 15 companies that were either based on NC State technology, working with University researchers, or formed by alumni. The companies showed enough promise to attract another $146 million from other venture firms and private investors, which Kline says is an important goal of the fund. "We wanted to reinforce that NC State not only has strong technology for investment but also is a great place to do business," he says.
About half of the young companies the fund backed haven't survived--a typical rate for high-risk venture investing--but Kline says potential stars in the portfolio, such as Biolex and semiconductor makers Nitronex and Silicon Semiconductor, could generate significant returns for NC State as they mature.
Until those returns are in the bank, University officials don't plan on a second venture fund to support research now in the lab. Treasurer Kathryn Hart says the endowment fund and foundations affiliated with NC State's various colleges that put up the $10 million may allocate more money to another University venture fund when they see good returns on the first fund. "Enthusiasm for the idea remains strong," Hart says, "but it's too early to know if the returns will meet the expectations."