Biotech investor A.M. Pappas & Associates may be closing in on a new venture fund – company officials won’t say – but the firm still is scouting nationwide for deals for its current fund.

Former North Carolina Gov. Jim Hunt implied Pappas was poised to wrap up a fourth fund last Tuesday night during a dinner at the Venture 2003 conference in nearby Chapel Hill. Hunt noted that the state had scored a trifecta in new venture funds between Intersouth Partners, Aurora Funds and Pappas, but then he caught himself and noted that one of the funds hadn’t closed yet.

Intersouth announced a $205 million fund two months ago, while Aurora closed its $85 million fund last week.

Published reports have said that Pappas was looking for up to $150 million in a new fund and was talking to potential investors as far back as last fall. But Senior Vice President Ford Worthy says the firm as a rule: It doesn’t discuss its fund-raising efforts until they are over and a new fund is in place.

“There’s really nothing to report right now,” Worthy says. He was unaware of Hunt’s remarks and says he has no reaction to them.

“We’re still actively investing our current fund, which was raised two years ago, if that tells you anything,” he adds.

Hunt is now a part of the Womble Carlyle law firm, was actively involved in technology and venture efforts in North Carolina during his four terms in office, and remains actively involved in state affairs both through the law firm and as part of the Emerging Issues Institute at North Carolina State University.

The $102 million A.M. Pappas Life Science Ventures II fund, formerly known as TechAMP II, was unveiled in June 2001. Pappas has used the fund to invest in Durham-based bioinformatics company Incellico and Dynogen, which is developing neurological drugs for urology disorders, as well as pharmaceutical and biotech firms in Arizona, California, Massachusetts and Utah.

Organic farming boost

The latest deal from the fund is Lansing, Mich.-based Emerald BioAgriculture. Pappas recently joined Burrill & Co. to lead a $6.2 million second round for the company, and Pappas Chief Investment Officer Eric Linsley has taken a seat on the company’s board of directors.

Emerald develops biological and biochemical agents to improve crop yields, enhance quality, combat disease and fight pests as a natural, environmentally friendly alternative to traditional, chemical-based agricultural practices. Its two main technologies involve use of an amino acid to boost yields and quality in high-value crops like almonds and grapes and fungi to control pests in melons, vegetables and nursery products.

The growth in organic farming and consumer desires for produce free of pesticide residue are providing Emerald with growth opportunities, according to company officials, and the new funding will allow it to expand its sales and marketing efforts.

Worthy says Emerald caught Pappas’ eye because two of the company’s board members, Bob Curry and Chuck Austin, also sit on the venture firm’s advisory board. Also, Burrill & Co., which had invested along with Pappas in several other companies, asked the firm to take a look at the deal, he says.

“It came to us from several different directions, and when you have that many people you trust recommending it, you tend to follow their lead,” Worthy says.

A.M. Pappas & Associates: www.ampappas.com