Local investors chip in money for regional fund
designed to assist midsize companies
From the February 14, 2003 print edition
Stacey Higginbotham Austin
Business Journal Staff
Several players in the Austin business
community have become limited partners in a venture fund that taps
their money and networking skills to help midsize companies succeed.
A total of $50 million may be available to such companies.
Keith Moe, a former 3M Co. executive; Gary Edwards, a ConocoPhillips
senior executive vice president; Katie Gaffney, a film producer
with ties to NBC's Katie Couric; and angel investor Harvey Ring
have written checks of $250,000 to $1 million each to join the InvestLinc
South Central Fund.
The fund is the first of 10 regional funds InvestLinc is creating.
InvestLinc, in business for about 10 years, has about $70 million
Hoffman Estates, Ill.-based InvestLinc Financial Services LLC,
which does business as InvestLinc Group, is the holding company
for five different susidiaries, including fund manager InvestLinc
Troy Wiseman, founder and chairman of InvestLinc Group, says the
concept behind the fund is less about raising money and more about
investing in social capital — or who you know. The concept calls
for InvestLinc to gather 99 people who have high-level connections
within a variety of industries and can assist portfolio companies
in meeting dealmakers.
"Who we know is how we make money and see deals," Wiseman
Because Wiseman believes so strongly in helping a startup grow
through InvestLinc's network, he assigns an InvestLinc investor
to a portfolio company to help it manage contacts and expand. The
portfolio company pays the InvestLinc representative a salary negotiated
by the startup and the person who will mentor it.
InvestLinc's latest fund also differs from other venture funds
because 50 percent to 75 percent of it is invested in an established
real estate portfolio. That leaves just $6.25 million to $12.5 million
to be dispersed among companies in Texas, Oklahoma and Arkansas.
Although the amount left after real estate investments seems small,
Wiseman says the fund usually invests only a small amount — less
than $1 million — in deals, but InvestLinc's limited partners are
welcome to chip in their own funds.
When you combine the fund's money and the partners' additional
investments, the amount available in Texas, Oklahoma and Arkansas
is close to $50 million, says InvestLinc investor Bob Martin, CEO
of Austin venture capital consulting firm JumpStart Partners Inc.
He says the fund benefits Austin because it concentrates on midsize
companies with revenue of $5 million and $25 million each. Also,
InvestLinc targets a variety of companies, as long as they already
have products and are approaching profitability.
"It's great to have another fund that focuses on midmarket
companies," Martin says. "I don't think we have enough
of those [funds] in this region right now."
Jim Jung, director and senior vice president of Sterling Heights,
Mich.-based Big Net Holdings Inc., says InvestLinc helped his firm
raise more than $13 million and also supplied big-name board members
such as John Couch, a former vice president at Apple Computer Inc.
"[Couch] gave us a lot of credibility on Wall Street,"
That credibility came in handy as Big Net tried to go public. However,
a few days before the offer was set to be priced in April 2000 the
stock market crashed and the dot-com boom was doomed.
After the company retreated to wait for a more opportune time to
go public, Couch left the board. But Jung says working with InvestLinc
helped him secure deals and learn more about growing his business
than he would have through a traditional venture capital firm.
Email STACEY HIGGINBOTHAM at (firstname.lastname@example.org).