Former Gov. Rick Perry’s pet project, the Texas Emerging Technology Fund, isn’t dead, it’s just been relocated.
Now under the management of the Texas Treasury Safekeeping Trust Company, there are about 100 active companies still in the fund, 60 percent of which focus on life sciences, said portfolio manager Jyoti Gupta at an Austin Technology Council seminar Wednesday.
This year, the Texas Legislature appropriated $12 million to help manage the fund, but also voted to abolish it and transfer it out of the governor’s office. Gupta said the fund was moved to her department Sept. 1 and added that the $12 million will be used to “add into the investments that we have made into these companies, as we see appropriate, as it makes sense for us.”
And, if any of the investments – in total, $400 million in Texas tax dollars were granted to companies and universities by the Texas Emerging Technology Fund – see profits, those dollars will also be “recycled back into the fund,” Gupta said. She estimates the remaining investments are worth about $145 million, but her office is currently undertaking a thorough inventory of the investments that will likely take months.
Starting in 2005, Perry began to offer grants for start up companies seeking seed stage money.
Last year, 19 Central Texas companies received $111.17 million in ETF funding, according to a report provided to the legislature, and promised to produce more than 15,000 new jobs.
In total, the fund has given 145 companies a financial boost, particularly important during the economic downturn, but faced criticism for its lack of transparency and investments in high-risk companies. Several grant recipients went bankrupt, and not all kept their promises to create jobs for Texans.
But there were also numerous success stories, which didn’t go unnoticed by Perry, who touted job creation and the “Texas Miracle” in failed presidential campaigns in 2012 and this year.
The turmoil was put to rest early this year, when Republican Gov. Greg Abbott abolished the fund – meaning it’s no longer accepting investment applications – less than two weeks after taking office. Since there were already companies in the fund, though, it had to be managed, and was reassigned to the Texas Treasury Safekeeping Trust Company, which manages state assets.
Meanwhile, Abbott also established the Governor’s University Research Initiative with $40 million and a mission to attract Nobel laureates and other major researchers to Texas universities.
“It is unfortunate that money doesn’t really exist anymore in its original form,” said Yash Sabharwal, COO of Xeris Pharmaceuticals Inc., which received $1.9 million in ETF money in 2012. “Those funds did have an impact.”
Xeris, which makes injectable treatments for diabetes, received ETF cash after promising to bring 12 jobs to the area. Sabharwal said the company now employs 13 Austinites and two people out of town. In January, Xeris announced it completed a $17.9 million capital raise to advance its diabetes treatment products.
“The money did help us bridge the gap,” during the economic downturn, Sabharwal said. But these days, the Central Texas life sciences tech market is hot. While it’s still “challenging to get money,” Sabharwal said, there are more options.
According to the council, the 206 life sciences companies in the greater Austin area comprise about 6,000 jobs and more than $1 billion in economic value. Austin’s life sciences community has grown organically, said Julie Huls, president and CEO of the Austin Technology Council, adding that the sector leans more towards technology because of Austin’s established tech ecosystem.
“Life science is the future of Central Texas technology,” Huls said to about 125 people at the opening of the council’s seminar.
Now, the council is pushing for more targeted growth in concert with other major Austin tech moves, including the future Dell Medical Center at The University of Texas at Austin and new wet labs at Austin Community Colleges. Sabharwal hopes the area will also soon attract major pharmaceutical companies to complete the life science tech supply chain.
Ottobock’s Regional President and CFO Andreas Schultz said his nearly-100-year-old prosthetics company, now worth more than $1 billion, relocated from Minnesota to Austin last year.
“We wanted to marry the tech that we bring from the medical device industry to the tech that exists in Austin,” Schultz said.
Ottobock was founded to meet the needs of veterans injured in World War I.
“We help people reclaim their lives after an incident, after an amputation, after coming back from wars, especially in the U.S., and we really help people regain their mobility,” he said.
Schultz joked that the one thing officials could do to help his business succeed was to have a direct flight from Austin to Frankfurt.
“We are working on a flight to Germany that should start in 2016,” said Charisse Bodisch, senior vice president of economic development for the Austin Chamber of Commerce.
via Texas Emerging Technology Fund Still Benefiting Life Sciences Startups – SiliconHills.
