Category: OIF

Chatting with CreditSuisse about the Oregon Investment Fund, Big Idea Bash

Oregon Investment FundAs I’ve mentioned previously, I recently got the chance to sit down with CreditSuisse to discuss the Oregon Investment Fund.

I’m the first to admit that I went into the conversation with my usual blooming buzzing confusion coupled with a heaping spoonful of blissful ignorance of the true nature of the Oregon Investment Fund.

I like to tell myself that that is part of my charm.

But honestly, I thought—rather than enter with pre-conceived notions—it would be better to get the story straight from David Almodovar of CreditSuisse.

Still, I have to be honest, I did walk into the meeting expecting one of two things to happen. Either I was going to find Dave perched atop a giant treasure chest overflowing with gold coins and jewels, cackling as he screeched in a Dr. Evil-esque manner “Here’s one hundred meeeellion dollars that you’ll never see.” Or I was going to find him wide-eyed and rapt with attention, hanging on my every word about the startup community in the Silicon Forest, until he finally gathered his wits and managed to utter, “Let me grab my checkbook. Would $50 million do?”

In reality—shockingly enough—neither of those things happened. I didn’t find a maniacal villain or babe-in-the-woods filled with naivete. Instead, I found a guy simply doing the job he was supposed to do: trying to attract investors for Oregon companies.

And as I walked through the questions I had—and the questions you were kind enough to ask—what became increasingly clear was this: the OIF can’t solve the problem we’re experiencing (and by “we,” I mean you entrepreneurs who are actually brave enough to start your own thing; not me, who sits here pontificating on your activities) because they weren’t designed to do so.

But I digress. Suffice it to say, the bulk of the problem at hand is not one that the OIF is designed to solve. You see, the OIF isn’t meant to be an investor. It’s meant to be bait or mistletoe or whatever.

That is, while they do happen to engage in some co-investment from time to time, they don’t lead on investments. In fact, the OIF is actually a fund of funds.

The Oregon Investment Fund (OIF) is a fund to other funds. OIF is designed to encourage, to build and to invest in growing, innovative enterprises creating risk-adjusted returns for the Oregon Public Employees Retirement Fund (OPERF).

So while OIF has money, that money is meant to serve as a means of attracting larger sums of money. By enticing venture capitalists to Oregon. And by encouraging—nay requiring—them to spend time here, chatting with entrepreneurs and growing companies alike.

Our financial strategy is to spread our risk across several types of funds, ranging from buyouts that invest in more mature and established businesses, to venture capital, and to early/seed stage funds that invest in young, fast growing companies. As of November 2008, we’ve invested in 10 funds in the Pacific Northwest region and in turn, we encourage these funds to invest in the growing local and regional market.

To support our strategy and encourage business growth in the Pacific Northwest, we actively build relationships between our funds and local entrepreneurs.

And they’ve been very successful in that regard, attracting approximately $233 million of investment for 20 companies, resulting in more than 900 jobs for Oregonians.

As part of that effort the OIF has managed to attract investment for some smaller startup organization in our area—and in the tech realm which I tend to cover here on Silicon Florist.

Kryptiq is one example of a company which has benefitted from the assistance of the OIF. AboutUs is another. OIF helped both of these organizations by attracting a venture capital firm that was looking for opportunities. In both of these cases, Voyager wound up being the firm that took advantage of the investment opportunities.

“Voyager invested in our Series A and they are the most active VC in tech startups in the Portland area,” said Ray King, CEO of AboutUs. “I think OIF has done a better job of attracting VCs to invest in Oregon than some other pursuits.”

And that starts to get to the crux of this square-peg-in-a-round-hole disconnect between many of the ventures in the Silicon Forest and the capitalists who are seeking to fund them: side projects and garage projects don’t always make good targets for VCs looking to invest large sums of money.

“We have a definite interest in building the entrepreneurial community here in Portland,” said Dave. “But we have a very institutional mindset. We’re not pursuing incubator-level investments.”

That said, there are investors that have been attracted by the OIF—Voyager for one and DFJ Frontier for another—who are interested in participating in much earlier rounds.

The OIF, it seems, is actually doing their job. It just so happens that that job doesn’t exactly line-up with the areas where our startup community needs assistance.

And that’s not really a “problem” per se. It’s just the way things are.

By way of analogy, it’s like having a hammer and needing to drive a screw. Looking at the two, it seems like it should work. But in practice, the two are fairly incompatible.

So, it’s very interesting to have the OIF out there, attracting VCs. And they’re very open in talking to any entrepreneurs and providing advice and guidance. Whether you’re interested in pursuing major funding or not. But when it comes right down to it, there is no knight in shining armor patiently waiting to fund very early stage companies in our startup environment.

But that knight is ready and waiting when companies—like Kryptiq and AboutUs—reach a point where the OIF can lend a hand.

So despite all my years of watching Geraldo Rivera and John Stossel, this little piece of investigative journalism fell a wee bit short. No big boogeyman. No bad guy. Just a series of seemingly complementary situations that, in fact, were not complementary.

Come to think of it, it was a bit like Geraldo’s whole Al Capone’s Vault thing. But didn’t we all learn something there, too? What’s that? Oh, I see.

Long story short, there’s still a funding problem or a “how we work on these projects and still manage to eat” problem. And we’re still searching for a solution. Currently, OIF isn’t the organization designed to solve it. In fact, there may be no existing organization designed to solve it.

Why? I like to think of the Portland startup scene as an untapped natural resource. But it’s not obvious how to use it. And we can’t take the current method of running in and depleting that resource. Because that either won’t work or it will kill it completely. We have to find a new way to work with those resources in a sustainable manner. And I think that calls for a new method of funding.

I could go on and on. But that’s an argument for another time, you special snowflake you.

So where do we go from here? Maybe the Big Idea Bash

So that’s that.

Next up? Beginning conversations with the politicians, entities, and investors who hold an interest in very early stage investments and maybe, just maybe, incubation. In other words, we need to find the solutions that are designed to solve the problems. Solutions like the Startup Now Oregon pursuit.

As Chris Logan writes:

Small businesses drive employment. Venture models have demonstrated the potential return of small growth companies. We have the opportunity to spawn high growth businesses that will deliver additional employment and high return on capital. These businesses will succeed because the crisis we face will economically reward new businesses the deliver solutions to our problems.

And if those solutions don’t exist? We may need to find a new way to make it work. But let’s at least start the conversations first.

And lo and behold, it just so happens a great place to start some of those conversations may, in fact, be an event hosted by the Oregon Treasurer Ben Westlund that the OIF is helping organize: the Big Idea Bash on April 29.

The Big Idea Bash is a social gathering created to connect entrepreneurs to the organizations that can help them flourish. This year the event will feature a speed pitching session, creating a unique opportunity to present new company ideas to a select group of Venture Capitalists who are funding emerging companies in Oregon.

I’m going to try to make it. And I would encourage you to try to attend, as well. Or don’t. I mean, it would be great to have you there, but you can also be sure that I’m likely to blather on about the event here afterwards.

But I must say, it would be great to have a contingent of entrepreneurs like you in the audience. So try to make it, won’t you?

One thing is for sure. Recent activity has clearly shown that I need more—arguably much, much more—education on what solutions currently exist and what they have been designed to do. And we’ve still got a long way to go in helping people understand the startup environment in which we find ourselves.

We’ve all got a lot to learn. But we’re already making strides that may resolve some of these issues. And we’ve proven, time and time again, that we can come up with creative ways of solving problems about which we’re passionate.

In any case, I’m looking forward to digging into this more and figuring out the ways to get you entrepreneurial types the kinds of help that will enable you to make your products a reality—and that will, in turn, make the Silicon Forest a success.

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What would you ask CreditSuisse about the Oregon Investment Fund?

Um Oregon Investment Fund?With all the talk about the Oregon Investment Fund (OIF) and the new $100 million entrepreneurial fund that Nedspace and Harvey Mathews are trying to start, I have found myself with a unique—and completely unexpected—opportunity: I get the chance to chat with the folks at CreditSuisse who are in charge of managing the OIF, Friday morning.

For those of you not familiar with the OIF, it was a fund established by the state of Oregon in 2004 to reinvest a portion of the Oregon Public Employee Retirement Fund (OPERF) in Oregon and Pacific Northwest businesses—to the tune of $158 million in potential investment.

Or, according to the OIF:

In 2004, the Oregon Legislature passed HB 3613 that allowed the Oregon Public Employees Retirement Fund (“OPERF”) to develop a fund-of-funds strategy specifically to take advantage of the private equity opportunities in Oregon and the Pacific Northwest (“PNW”). Managed by CFIG, the Oregon Investment Fund (“OIF”) commits capital to private equity and venture capital funds (“Underlying Funds”) that will, in turn, invest in companies located in the State of Oregon as well as the PNW.

Comprised of combined commitments of $150mm from OPERF ($100mm in Fund 1 and $50mm in Fund 1A) and approximately $8mm by CreditSuisse ($5mm in Fund 1 and $3mm in Fund 1A), the $158mm, return oriented program seeks to build successful, innovative enterprises for the benefit of its investors by:

  • Fostering the creation and growth of young and maturing companies in Oregon and the PNW
  • Encouraging the development and growth of a vibrant Oregon and PNW private equity community
  • Facilitating public and private partnerships within the State of Oregon

And one of the areas in which CreditSuisse has authority to invest? That’s right, you guessed it: high tech.

The high tech industry represents more than 50 percent of Oregon’s economic output and includes leading semiconductor manufacturers as well as makers of computer components. Semiconductor companies with operations in Oregon include, Intel, ESI and TriQuint, among others. These companies make up 10 percent of the annual semiconductor production in the U.S. Oregon’s computer component companies include digital projector manufacturers, electronic design automation leaders and liquid crystal display (“LCD”) makers. InFocus, Mentor Graphics, Planar Systems and Hewlett-Packard are among the corporations who represent the State’s computer components sector. Each of these companies presents a breeding ground for creative innovation to spur the development of new businesses and a growth economy.

Yeah, I hear you. I don’t see much about open source, Web applications, or Mobile development, either. And “InFocus, Mentor Graphics, Planar Systems and Hewlett-Packard… [presenting] a breeding ground for creative innovation to spur the development of new businesses and a growth economy”? Seriously?

Help… ?

Now, as anyone who has read Silicon Florist can attest, I’m not exactly the sharpest knife in the drawer. So this is where you come in. (See? Dangling preposition. I repeat: not sharp.)

I realize it’s terribly short notice. But I was wondering if I could get some of your input?

What would you like to ask CreditSuisse about the OIF?

Please feel free to comment or ping me on Twitter. I’ll do my best to ask your questions along with my own.

And rest assured, that once I’m done with the interview, I’ll no doubt blather on about it here, as per usual.

Thanks in advance for your assistance.

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South of the Forest: Meet Oregon Investment Fund in Medford

Granted, Medford, Oregon, is more “real forest” than “Silicon Forest.” But this event seemed to be right in line with the entrepreneurial spirit of the Silicon Florist, so I thought I’d pass it along. (Besides, I’m always hoping that a few of you Rose City startups can get a slice of that $100 million of love that is the Oregon Investment Fund (OIF).)

On November 14, CreditSuisse, managers of the OIF, will be hosting “Real-world Case Studies of Emerging Companies Searching for Funding.”

Sure, Medford’s a bit of a haul. But far be it from me to keep you from a road trip.

For more information on the event, see the press release. To register, visit the Southern Oregon Regional Economic Development site.

What’s the Oregon Investment Fund? I’m glad you asked. You see, in July 2003, the Oregon State Legislature approved a mandate for the Oregon Investment Council (OIC) to design and implement a US$100 million program that encourages the growth of small businesses within the state of Oregon. To accomplish this mandate, the OIC chose to develop a fund of funds, the Oregon Investment Fund. This fund, which is capitalized by funds from the OIC, has committed capital to private equity and venture capital funds that in turn invest in companies located primarily in the state of Oregon, as well as the Pacific Northwest region. Contact www.oregoninvestmentfund.com for more information.

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