By SHERYL JEAN / The Dallas Morning News

sjean@dallasnews.com

Frisco business incubator NTEC Inc. launched a new program Monday with 10 mostly out-of-state venture capital partners to reinvigorate investments in Dallas and beyond.

NTEC’s Venture Alliance Partner Program is designed “to address the burning need in the region by companies that have been struggling so mightily to attract venture capital,” said NTEC executive director Larry Calton. “And we want to bring in the venture capitalists and show them there are good deals here in Texas.”

The venture partners, including one Dallas firm, will meet with entrepreneurs during “office hours” at NTEC from two days a month to two days each quarter. Any company in the Southwest can apply to the program.

Seven-year-old NTEC, which provides office and lab space and support services to medical and clean technology companies, will help identify and screen companies and coordinate meetings with investors. Southern Methodist University business students will help with due diligence and market research of applicants.

“Most of our companies here fall into the $2 million to $3 million range,” and that’s too small for many venture capitalists and too big for many angel investors, said NTEC senior director Hubert Zajicek. The 10 venture capital firms invest in medical technology and biotechnology, and they’ve invested in Texas before or want to.

U.S. venture investments have improved this year, but Dallas dollars remain dismal.

Dallas-area venture capital investments fell 47 percent to $68.1 million in the first half of this year from the same year-ago period, based on data from PricewaterhouseCoopers. Investments in biotechnology and medical devices have risen but are still small: $12.1 million for the first half of this year, compared with nothing at all last year.

“There is a glaring dearth of institutional capital throughout Texas, including Dallas,” said Alan Ying, a general partner with Louisville, Ky.-based Chrysalis Ventures, an NTEC partner. “The odds are just less likely to have institutional capital invested in companies without a local presence. We see opportunity in that.”

Ying, who opened a Chrysalis office in Houston in April, hopes the NTEC partnership exposes the venture firm to more “local entrepreneurs working on exciting opportunities.” Chrysalis, which has invested in one Dallas company, is investing from a $175 million fund raised in 2008.

Dallas-based Sevin Rosen Funds was NTEC’s first partner.

“It gives us more reach and an opportunity to work on medical technology projects,” in Far North Dallas, said Sevin Rosen general partner Jon Bayless. “They’re reaching out to folks that we wouldn’t see and they have unique laboratories that we wouldn’t have access to otherwise.”

NTEC eventually hopes to attract more venture capital partners and some strategic partners, also known as corporate venture capital, to the program, Calton said.

One of those partners might want to help NTEC start its own venture capital fund, he said.

July 26, 2010, by Alexander Haislip

Incubator. Just the sound of the word may call to mind raucous Internet entrepreneurs spinning around in Aeron chairs, burning through money.

Yet a new incubator in Texas might have a shot at reinvigorating the idea for startups in the region. The North Texas Enterprise Center for Technology (NTEC), announced today it was working with 10 venture capital firms to stimulate the growth and development of cleantech and medical device startups in the Frisco, Texas area.

Incubators are designed to give a several startup companies a place to work and some degree of back-office support while they are in their most formative stages. The idea is that half a dozen startups can occupy the same office space when each has only three or four employees and can move out into bigger offices when they raise venture capital dollars or develop a level of self-sustaining sales. It’s a good way for small companies to pool their resources and save money.

The dotcom boom gave incubators a bad name. Several real estate firms in San Francisco opened trendy office space in South Park and other areas in the South of Market area of the city to startups looking for a home. The real estate owners traded rent for stock options, hoping their tenants would create billion dollar Internet companies.

It was a scheme that worked for some, no doubt. But real estate owners are not especially well suited to evaluating early stage startups. So a decade after the boom, incubators are seen by many as a cesspool of amateur entrepreneurs and poorly executed startups.

That’s a fate that NTEC should avoid. It’s equipped with three things that the real estate developers of San Francisco lacked.

First, it has recruited people with serious chops to help the startups it works with accelerate their development. Its directors and advisers hail from tech giants such as Texas Instruments, Blue Cross Blue Shield and several major research hospitals in the region.

Second, the incubator isn’t going to compete with venture capitalists to find and finance early stage startups. It’s going to invite out-of-state venture firms to come to the incubator to find potential investments. Partners include Arboretum Partners, Chrysalis Ventures, Noro-Mosely Partners and H.I.G. Bioventures, among others. There’s a real need for this type of partnership in Texas, where startups only raise about a tenth as much as startups in Silicon Valley do during any given year.

Third, NTEC has a clear and well-reasoned mandate. The program is focused on medical device and cleantech startups that can actually benefit from sharing production and prototyping equipment.

Since the dotcom boom, medical device startups are the only ones proven to flourish inside incubators. NTEC is situated to provide a regional alternative to two prominent venture capital supported incubators in other parts of the country: The Foundry, which focuses on medical device startups in Menlo Park, Calif., and Accelerator, which works with healthcare-focused biotechnology startups in Seattle. Each is designed to do a lot of the hand-holding necessary for an early stage technology venture without taking up lots of resources.

The Foundry is backed by Split Rock Ventures and Morganthaler Ventures, each a well-known venture firm with significant life sciences experience. It works with one or two startups at a time, helping them navigate intellectual property agreements with universities, giving them office space to work, lending them tools to prototype their medical devices and lending a hand with the management and administration of the startup.

Accelerator is a management company created by a group of health care-focused venture firms, a real estate firm and the Seattle-based Institute for Systems Biology. Its aim is to utilize the same management, office space and resources to save on costs for the three to five startups looking to prove their worth. Accelerator’s executives focus on getting startups to critical milestones as quickly as possible. That can help the startups raise less money when they go on to collect later rounds of venture capital investment.

Working with The Foundry or Accelerator doesn’t oblige a startup to raise venture capital dollars from the firms that support each incubator. But it does give the venture firms a close relationship with the startup, making it highly likely that they will work together for a subsequent financing round.

It’s unclear exactly what relationship the 10 venture firms who are partnering with NTEC will have to the startups financed there, but it should be a fertile hunting ground for innovation in the region.

Venture Wire, Staff Reporters, July 07, 2010

Obstetric device developer CerviLenz Inc. has named Federica O’Brien to the newly created positions of chief financial officer and chief operating officer.

O’Brien was previously a director of life sciences at RSM McGladrey, an assurance, tax and consulting firm. She also served as a senior financial executive at biotechnology companies Cardiokine Inc. and Barrier Therapeutics Inc. and Internet software and services company Infonautics Inc.

 O’Brien will play a key role in the company’s funding round planned for next year, according to a CerviLenz representative.

Last year, CerviLenz raised $4 million in Series A-1 financing to finish ongoing clinical trials and begin commercialization. Investors include Arboretum Ventures, Chrysalis Ventures and North Coast Angel Fund.

Based in Chagrin Falls, Ohio, CerviLenz was founded in early 2008 and is developing a device to measure the length of a woman’s cervix during pregnancy as a predictor of pre-term birth risk.

http://www.cervilenz.com