Diamond State dominates state's tiny VC industry. (Venture Capital).WHEN C. SAM WALLS AND Joe T. Hays looked around a few years ago, they saw a state chock full of natural resources--timber, soybeans, catfish, oil and diamonds. But the Arkansas Capital Corporation Group executives didn't see much venture capital. Walls and Hays launched an ambitious plan in 1999 to turn Arkansas into fertile VC soil with Diamond State Ventures--a funding firm of 41 banks, the Arkansas Development Finance Authority, a handful of individuals and Stephens Group Inc. of Little Rock. "We were looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. some way to develop the venture capital industry in Arkansas ... Activity stimulates activity," Walls said. "We viewed ourselves as a catalyst." After three years, $12 million in fundraising, a 3-to-i match from the U.S. Small Business Administration and a 20year, $2 million ADFA ADFA Australian Defence Force Academy ADFA Associação dos Deficientes das Forças Armadas (Portugal) ADFA Arkansas Development Finance Authority (Arkansas) ADFA Australian Dried Fruits Association loan, Diamond State has hit a few home runs and has struck out. "(Diamond State) raised the perception of the investment community in and outside of the state; they've exceeded my expectations," said Dale Dawson, vice president of banking at Stephens and a former DSV DSV Deep Submergence Vehicle DSV Diving Support Vessel DSV Dynamic Signature Verification DSV Dilute Solution Viscosity DSV Directia Sanitar Veterinara DSV Dive Surface Valve (rebreather) investment committee member. "You'll have companies that don't make it, give you money back or make you lots of money. "That's the nature of venture capital." While Walls said numbers on DSV's statewide impact are hard to come by, Hays said there had been a tenfold increase in venture capital financing To start an own company or to bring a new product to the market, the venture may need to attract financial funding. There are several categories of financing possibilities. If it is a small venture, then perhaps the venture can rely on family funding, loans from friends of Arkansas companies List of Arkansas companies includes notable companies that are, or once were, headquartered in Arkansas. A
About $3 million was invested in Arkansas companies in 1999 in a combination of Diamond State and federal matching programs, based on SBA SBA abbr. Small Business Administration Noun 1. SBA - an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government figures, Hays said. That figure, as of Sept. 30, 2002, had surged to $33 million, with most related to DSV. About $20 million from Diamond State has gone into 12 companies, Hays said, leaving about $36 million untouched. An "investment horizon"--or, day the money runs out--is expected after 2006. So far; DSV has invested: * about $1.5 million in a loan to Trans-State Lines Inc., a Fort Smith trucking firm, that needed a cash infusion for a management buyout Management buyout (MBO) Leveraged buyout whereby the acquiring group is led by the firm's management. management buyout See going private. in February 2000. By March 2001, the company had apparently ceased to operate and most of its assets had been sold to an Indiana company. * in HealthScope Benefits Inc., an 18-year-old employee health benefits management firm. DSV no longer has an ownership stake in the company. * about $950,000 in Mercari Technologies Inc., a Fayetteville software firm that has apparently shut down. * about $2 million in webTPA, an frying, Texas, software firm specializing in Web-based health plan administration software. * in MedEvolve Inc., a 20-year-old Little Rock company specializing in customized patient management software. * in TrestleTree tres·tle·tree n. Nautical One of a pair of horizontal beams set into a masthead to support the crosstrees. Inc., a Fayetteville firm specializing in health management software for companies that self-insure employees. * in DMD (1) (Digital Micromirror Device) See DLP. (2) (Digital Multi-layer Disk) See high-def DVD formats. Inc. of Springdale, a distributor of party supply, scrap booking, paper crafting and stationery products. Formerly DMD Industries, the 6-year-old company merged last year with Westrim Crafts of Van Nuys, Calif. * in Three Dog Bakery A dog bakery is a business that produces fresh baked goods for dogs. According to Retailwire1, there is a trend among US consumers to humanize and indulge their pets. This indulgence is also partly fuelled by the trend to purchase natural and organic products. ; a Kansas City Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). , Mo., company that sells gourmet dog treats online and in a small chain of stores. * in Veriplas Containers Inc., a Little Rock company that makes a variety of plastic bottles. Hays won't say how much has been invested in several of the companies or what sort of profit has been generated by DSV on most of the successes. A winner for DSV appears to be propane marketer and distributor Inergy 12 of Kansas City. The company's stock traded in the $30 range last week, compared with its $22 initial public offering price in July 2001. Diamond State bought into the company in February 2001, months before the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. , but the investment size has not been made public. DSV is locked into a no-sell clause that expires in June 2004. "I wish they all could be that successful," Hays said. "(Inergy) had a good management team, track record and business plan. They were unusual for a small company." A loser has been Divine Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). :DVINQ.PK), a Chicago firm that produces online and in-store customer transaction analysis software, which has filed for Chapter 11 bankruptcy and been delisted from the NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on . It traded last week on the OTC at less than 5 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . DSV ended up as an investor in Divine after its original portfolio company, Digital Archaeology of Kansas City, was acquired by Delano Technology Corp. of Markham, Ontario Markham (2006 Population 261,573[0]) is located in York Region, directly north of Toronto, and is part of Toronto's CMA. It is larger than many Canadian cities. Despite its qualifications regarding population, it has not had the title of city conferred upon it by the , which was in turn acquired by Divine. It's not a topic Hays or Walls like discussing, although Hays said DSV did get back a chunk of its original $750,000 investment in Digital Archaeology, even if the investment did lose money. "Businesses fail, and you just hope your batting average batting average n. Baseball A measure of a batter's performance obtained by dividing the total of base hits by the number of times at bat, not including walks. Noun 1. is high enough," Hays said. For the most part, DSV has focused on mid-range risk companies--what Walls called "patient" capital--with about half of current investments in non-Arkansas companies. "During the dot-com craze, things got a little wild (for investing) but we didn't do that," Walls said. "We felt it was unreasonable and didn't get caught up in it and didn't suffer like a lot of venture capital firms Name Location Founding date Managing Partners/Directors Specialty Capital managed 5AM Ventures Menlo Park, CA; Waltham, MA 2002 John Diekman, PhD (managing partner), Scott Rocklage, PhD (managing partner), Andrew Schwab (managing partner) life sciences $200M [1] around the country." Gene Eagle, vice president of development and finance for ADFA, said the agency was pleased with DSV's efforts and supported out-of-state funding, which has built a venture capital network including firms such as Kansas City Equity Partners, Davis-Tuttle of Tulsa and Corporate Southwest of Dallas. "You can't limit investment opportunities to within the borders of the state or one specific industry, sector or stage of a company's growth," Eagle said. "(DSV) could organize an investment four, five or six times what they can do on their own." About 2,000 companies and proposals have been considered in DSV's short life. Rejecting proposals has angered some. "In this business," Walls said, "it's a case of nobody's baby is ugly." Arkansas Capital Corporation Group also has a higher-risk venture capital fund, Arkansas Ventures, in the works. Most of DSV's investments have been as five-year subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". with options for conversion to shares, Hays said. ADFA has 80 shares as collateral for its $2 million loan--the largest partner investment in DSV, which divides returns among partners. Loan terms are current, Eagle said. With about $36 million left to invest, Hays said hot sectors right now are business services--outsourcing, business processes and health care management. Trucking and natural resources sectors are unlikely to gain intense DSV interest. Meanwhile, DSV will continue networking to build a strong Arkansas venture funding base. "Activity begets activity. I hope through our efforts and working with Arkansas we can provide a positive example to show that we can do it here...and build a venture capital industry. There are lots of worthy ideas," Hays Said. "There is no reason it can't happen (programming) can't happen - The traditional program comment for code executed under a condition that should never be true, for example a file size computed as negative. Often, such a condition being true indicates data corruption or a faulty algorithm; it is almost always handled here." RELATED ARTICLE: Diamond State Venture Partners As of September 1999 * First United Bancshares Inc., El Dorado El Dorado, legendary country of South America El Dorado (ĕl`dərä`dō, –rā`–) [Span.,=the gilded man], legendary country of the Golden Man sought by adventurers in South America. (now BancorpSouth Inc., Tupelo, Miss.) * Metropolitan National Bank, Little Rock * One Bank and Trust, Little Rock * Simmons First National Bank of Pine Bluff * Simmons First Bank of Russellville * Simmons First Bank of Dumas * Simmons First Bank of El Dorado * Simmons First Bank of Jonesboro * Simmons First Bank of Northwest Arkansas, Rogers * Simmons First Bank, Searcy * Simmons First Bank of South Arkansas, Lake Village * DeWitt Bank & Trust Co. * Citizens Bank of Batesville * Helena National Bank * Citizens' Bank & Trust Co., Van Buren * The Bank of Fayetteville * First National Bank of Fort Smith * Regions Bank, Birmingham, Ala * M&P Community Bancshares Inc., Newport * Mercantile Bank of Arkansas (now U.S. Bank, Minneapolis) * Malvern National Bank * Arkansas Capital Corp., Little Rock * Stephens Group Inc., Little Rock * First Security Bank, Searcy * Farmer's Bank & Trust Co., Clarksville * First Community Bank, Conway * People's Bank & Trust Co., Mountain Home * Capital Southwest Corp., Dallas * Jerry B. Adams and Karlee B. Bradley Trust, Little Rock Source: Arkansas Development Finance Authority List may not be comprehensive. |
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