WRAL Tech Wire

N.C. fund is good news for state's tech entrepreneurs

Venture capital

Related Blog Posts

• Credit Suisse to manage $230M N.C. fund, invest some of own money

On The Web

• Innovation Fund RFP
• Local Tech Wire at Twitter - sign up today for latest news alerts

Site Search

Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.

RESEARCH TRIANGLE PARK, N.C. – N.C. State Treasurer Janet Cowell's selection of Credit Suisse to manage the new state Innovation Fund means that good news is at hand for the state's tech entrepreneurs.

Financial news, that is.

Markets that have been starved of capital will get an infusion of funding, which simply is the oxygen on which startups operate. (For more details, read here.)

One venture capitalist told Local Tech Wire on background that the pick of Credit Suisse is a good one, given its strength as an international investment bank. The conglomerate already is committed to North Carolina with a growing presence in RTP. Now its investment team can work within its vast global network of contacts to bring more funds to the state.

Cowell's office confirmed that Credit Suisse will have some skin in the game itself - at least one percent - for deals. The Treasurer also expects Credit Suisse to be looking for investment partners, meaning that the $230 million North Carolina is committing could be leveraged into four or five times that amount, the VC said.

Cowell issued a request for proposal last fall seeking applications from firms to manage the $250 million fund. The money is being drawn from the state’s $66 billion public pension fund.

Investors and entrepreneurs have been quite vocal in recent years in seeking more funding for new and emerging companies.

The terms of the RFP were pretty high. For example, hopefuls wanting to manage the state’s investment must have “at least $1 billion of total assets under management,” according to the RFP.That amount far exceeded what local venture firms could bring to the table.

Intersouth Partners, the largest venture firm in North Carolina, didn't reply to the RFP, the firm's Suzanne Cantando told LTW.

However, VCs contacted by LTW saidneither the RFP nor the choice of Credit Suisse was a slap at them. Rather, Cowell set the bar high and picked what they consider a reputable, experienced and high-performing firm that can produce the high rate of returns Cowell is wanting.

Cowell set some high bars in the RFP.

In addition to having ‘at least five years of experience” in direct or co-investments, the winner must have worked with “25 or more private companies with significant operations in North Carolina.”

The Treasurer also wanted a firm with “broad private equity investment experience, including multiple industries and multiple investment categories” such as venture capital, growth equity and buyouts.

RFP respondents were evaluated in six different areas:

• Firm background and investment philosophy, process and capabilities (60 percent)
• Performance (20 percent)
• Fee proposal (20 percent)
• Conflict of interest and compliance (5 percent)
• References (5 percent)
• Quality, clarity and adherence to the RFP (10 percent)

Will Credit Suisse deliver?

“Credit-Suisse stands out for prudent management even during the recent banking crisis, so their selection as manager for the Innovation Fund is in keeping with the State Treasurer’s record of careful stewardship of the state’s pension fund," Brooks Raiford, chief executive officer of the North Carolina Technology Association, told LTW.

"The availability of these resources for investment in companies based in North Carolina, or with a large presence here, will hopefully provide the dual benefit of strong investment returns and an economic boost to our state.”

Get the latest news alerts: Follow LTW at Twitter.
 

The Skinny

WRAL Local Tech Wire Publisher and Editor Rick Smith dishes out tidbits from the local technology sector. Read more articles…