As the world around us becomes more crowded and complex, the human population faces increasingly difficult challenges, particularly in the areas of health care, food supply and energy. A host of innovative and disruptive technology-based solutions devised by researchers all over the world will be required to overcome those challenges. Perhaps not surprisingly, some of those solutions are being developed in our own backyard with financial support from homegrown investor firms.
Venture capital firm South Dakota Innovation Partners invests in early-stage companies that are working to commercialize technologies developed by university researchers, focusing on the areas of agriculture technologies, life sciences and engineered technologies. The firm was founded in 2009 by a small group of investors at the suggestion of Brookings’ South Dakota State University President David Chicoine, who had previously helped form a similar fund at the University of Illinois, according to Mark Luecke, Innovation Partners managing partner and CEO.
The firm’s first round funding closed in 2011 with $6 million and it has since invested in six companies, each one with a unique approach to providing energy, food or health care solutions to the world’s population. All of the firm’s partner companies have offices in Brookings.
Luecke says the firm specializes in identifying early-stage companies with significant potential for private development. “We’re not setting out to develop large-scale manufacturing and distribution businesses,” he says. “We’re really looking to leverage the strengths of the team and the technologies that have been developed.” The firm pays close attention to a company’s team and the ability of a researcher to identify their own strengths and weaknesses. “A red flag for us is someone who believes they can achieve commercialization on their own,” he says.
Agriculture and engineered technologies and life sciences are the firm’s primary areas of focus because they represent areas of research strengths in the upper Midwest and also present opportunities for value-added solutions, according to Luecke.
Partner company Prairie Aquatech, for example, is developing a process to produce high-protein fish meal from soybean meal and dried distillers grains, a co-product of ethanol production. The resulting product is comparable in quality but less expensive than fish meal currently available on the market. It also adds value to an existing agricultural product. The company’s initial product is currently being used in commercial feeding trials and is expected to enter into the market next year.
Innovations Partners is also a partner in Medgene Labs, which is focused on developing a method to regenerate the lymphatic system in breast cancer survivors, thus reducing the risk of infection. The National Institutes of Health recently recognized the company’s innovative work by awarding it more than $135,000 in grant funding to achieve its phase 1 goals. It is the first South Dakota-based company to receive an NIH phase 1 grant since 2009.
Another Innovation Partners company, Applied NanoFilms, has received nearly $200,000 in grant funding from the National Science Foundation for its work in developing more efficient solar cell technology.
Innovation Partners has attracted significant interest from potential investors since its launch and Luecke says the climate for venture capitalists in South Dakota and throughout the region is strong. There are a number of active firms in the area and he expects that will continue into the future. “Good deals find capital and I think that’s happening.” PB
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