This post by Ben Tedore
Nevada’s first early stage venture capital program is now live! The Battle Born Growth Escalator Venture Program (“Battle Born”) makes equity investments in early stage, high growth Nevada enterprises.
Venture capital has not traditionally been a strong suit for Nevada; the state received only $2 per head in venture capital in the year to June 2013, compared to over $300 per head for Californians, based on National Venture Capital Association figures. On the upside, Nevada’s venture capital landscape has seen positive changes of late. In 2012, the Nevada Capital Investment Corporation (NCIC) allocated $50 million from the State of Nevada’s Permanent School Fund to investment management firm Hamilton Lane. The Silver State Opportunity Fund is a private equity fund of funds, whose strategy is to invest at least 70% of its allocation in Nevada. Earlier this year, the US Department of the Treasury approved an allocation to Battle Born, a complementary program that invests in smaller Nevada firms. These programs both represent investment ‘firsts’ for the State of Nevada.
In addition, Nevada has seen an influx of investment management firms, better business incentives, more support from entrepreneurs, and recognition of the State’s opportunities. Recognizing Nevada’s advantages, investment firms, such as DCA Partners and Huntington Capital, have opened investment offices in the State, joining an established network of angel groups (such as Vegas Valley Angels, Sierra Angels and Reno Angels), venture capital and private equity investors.
The new $5 million Battle Born program helps fill the funding gap for early stage companies and will help attract promising entrepreneurs to Nevada. The fund is managed by the statewide Nevada Small Business Development Center, and is overseen by the Nevada Governor’s Office of Economic Development (GOED) under the auspices of the US Treasury’s State Small Business Credit Initiative (SSBCI). The fund invests in early stage Nevada enterprises in the following sectors: aerospace & defense, agriculture, energy, healthcare, IT, logistics and operations, manufacturing, mining, tourism and gaming, and water. The program can invest up to $1 million per business, though the average fund investment will be much lower. The funds will be prioritized for companies whose high-growth products have an enduring sustainable advantage over competitors, that have traction with customers, and that have teams with a proven track record in their industry. When investments are sold, the proceeds will be reinvested in other Nevadan companies.
“The program seeks our most exceptional entrepreneurs and companies for investment” said GOED’s Director of Technology Commercialization, Karsten Heise, who oversees the Battle Born program. Specifically, successful applicants will demonstrate:
- a multi-disciplined team with a relevant track record;
- traction with customers by letters of intent or proof of concept partnerships, a differentiated, defensible technology, whether it is through patents or by a unique advantage in the chosen market;
- a substantial potential market (seeking companies that are addressing markets that have the potential to grow to at least $300 million);
- a support network;, whether it’s in the form of a formal advisory board, or a relationship with a researcher, or an accelerator program
- A reasonable expectation of more than a 3x return on Battle Born’s investment over a 3-5 year period
- A clear exit plan for securing the follow-on financing needed to successfully grow the start-up
Battle Born works with pipeline partners in academic, accelerator, and investment fields and applicants are strongly encouraged to work with a pipeline partner, for example, a Nevada SBDC business counselor. “These experienced professionals can help to develop your business plan or guide you as to the best form of funding for your business” Heise added.
To apply, find details, guidelines and information about pipeline partners, see http:// battlebornventure.com/. Interested applicants should upload an executive summary or business model canvas to the project’s website.
By Nicola Kerslake, Investment Manager of the Battle Born Venture Program and Winnie Dowling, Deputy Director of the Nevada Small Business Development Center, College of Business, UNR