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Embarking on a new Venture: New leader planning progressive changes at center, not a total revamping

April 30, 2007

The new leader of the Indiana Venture Center is beginning to put his stamp on the not-for-profit that mentors promising startups.

James Eifert, 64, is the former president of Terre Haute-based Rose-Hulman Ventures who took charge of the center in December following the July resignation of Steve Beck. Beck left to become co-managing director of IVC Equity Partners, a new local seed-capital fund.

Chief items on Eifert's to-do list are broadening the donor base, revamping the Venture Center's proprietary network of angel investors, and developing stronger collaborations with complementing organizations.

Observers say the changes Eifert is making are a natural progression of its mission rather than a complete overhaul. Even so, finding new funding outlets is vital to the organization's existence.

Beck launched the Venture Center in early 2004, with the assistance of Bruce Kidd, who now is director of small business and entrepreneurship for the Indiana Economic Development Corp.

"I think when you see them changing things, it's not because the Venture Cen- ter is a failure or what Beck and Kidd did didn't work," said David Millard, chairman of the Business Department at locally based law firm Barnes & Thornburg LLP. "You just have different people playing with the combination and trying to unlock it."

The center charges nothing for services and is financed entirely by Silicon Valley entrepreneur Mike Hatfield. A Middlebury native and Rose-Hulman grad, Hatfield made his fortune in telecommunications, selling high-speed optical transport company Cerent Corp. in 1999 to Cisco Systems Inc. for $7.3 billion.

Hatfield agreed to provide $3.5 million to underwrite the center, which has an annual budget of roughly $1 million, for the first three years. The seven universities that partner with the center-Ball State, Butler, Evansville, Indiana, Notre Dame, Purdue and Rose-Hulman-provide some funding, as well as incubator space and student assistance.

But with Hatfield removed, the funding base needs to be expanded, said Eifert, who is in discussions with potential donors not yet ready to be identified.

Organizers in the beginning declined to seek private funding because they knew it would be impossible to raise money for a new program with no performance record.

"It's not going to be easy," Beck said. "Getting people in Indiana to support things like the Venture Center is, and was, tough. But the stars are in alignment now. I think Jim is in a good position today and should be successful."

That's largely due to the center's network of universities and business relationships, and its growing reputation as an entrepreneurial authority.

Its clientele includes Brogan Evotem LLC in Indianapolis, formerly Telecom Solution Center; Vasc-Alert LLC, a Lafayette-based IT startup that specializes in bioanalytics; and Pharmaceuticals LLC in Crown Point, which develops orphan drugs or products that treat rare diseases.

The center has four full-time employees and five "executives-in-residence" who provide consulting services. In addition, seven MBA students from IU, Purdue and Notre Dame will work there this summer.

"If you're trying to help people become successful," Eifert said, "you need to operate with that same mind-set."

Another funding option might be to take an equity stake in a company in exchange for counseling fees. Eifert further plans to charge for educational events and business-plan evaluation and writing, and for more complete services for companies making it to the funding stage.

Revamping funding base

Much of the early funding originates from AngelNet, the database of several hundred wealthy Hoosiers who occasionally invest in startups. David Doyle, a financial services veteran who managed Inception LLC, has been brought on board to oversee it.

Doyle is whittling AngelNet down to about 30 accredited investors, each of whom will be required to pay annual fees of $1,000. The idea is to narrow the network to its most eager participants who will share their time and experience, in addition to their cash.

The investments, usually in the six-figure range, often are the bridge between a startup's initial friends-and-family financing and the formal venture capital it attracts once it shows a track record.

Millard, Kidd and Marcus Chandler founded AngelNet during their days at the now-defunct Leagre Chandler & Millard law firm and its business consultancy, Concord Partners. The database of Indiana investors numbered about 400 upon its transfer to the Venture Center. But the list became unwieldy and difficult to manage, due to what could be perceived as a fair amount of "pretenders" and "tire-kickers," Millard said.

The aim, though, is to ultimately rebuild the network and better match investors with business plans, Doyle said.

The Venture Center does not invest in companies, but helps fill the gap in seed capital. It has helped hundreds of entrepreneurs evaluate their business plans and growth strategies, and shows the best to members of AngelNet.

Counselors initially might talk to 25 entrepreneurs in a month. Of those, only a few actually receive angel funding.

"Our commitment to the angels is that we will do a much more thorough job of screening companies," Doyle said. "We want to get the bugs ironed out of the process, if you will."

Partnerships aplenty

Part of that might mean linking the Venture Center to larger and more established organizations to further its mission.

The center could become involved in TechPoint's annual Technology Summit and Mira Awards, or TechPoint could lobby on its behalf, Eifert said. The IT initiative falls under the umbrella of the Central Indiana Corporate Partnership, which might present additional opportunities.

David Johnson, executive director of the city's BioCrossroads life sciences initiative, which also is part of CICP, concurred.

"CICP is pretty rapidly becoming the mother ship for a lot of those initiatives," Johnson said. "It's the right time for a group like the Venture Center to come in and be a part of that foundational effort."

To be sure, CICP on April 19 absorbed the Indy Partnership, the regional economic development group that markets Indianapolis for business relocations and expansions.
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