DENVER - As one of his 2006 initiatives for the statewide business catalyst, CTEK Venture Centers President Gary Held wants to launch a CTEK private equity fund.
The fund would make capital available to entrepreneurs throughout Colorado who would not have to be CTEK clients.
"What we've seen in the marketplace is that there are multiple levels of financing, but there is a huge gap between companies getting angel financing and the type of companies that attract venture capital."
The fund would fit the company that needs $2 million to $3 million to get to profitability, "and may never need more money," he said.
"In Boulder County there are companies that don't need phenomenal amounts of money to grow to $50 million, but if they can't get their financing they can't exist. Right now they have nowhere to go."
Held is targeting "very high net worth individuals" to raise about $15 million to start the for- profit fund.
The fund is still in the planning phase, Held emphasized. But once he's confident about a management plan and investment strategy, he said he'd like to begin raising funds sometime this spring.
Held estimated it would take 18 to 24 months to raise enough capital to begin funding companies.
Held said some members of CTEK Angels, the private investor organization affiliated with CTEK, might be interested in investing in the fund as well.
But angels and equity fund investors tend to look for different things when they invest, Held said. "Angels enjoy getting involved in the companies, but ultrahigh net worth people don't have the time."
The fund would be managed by a professional fund manager "with a track record of making good investments," not CTEK, Held said. CTEK would use its network of advisers to evaluate the companies to invest in.
Every company that gets funded must bring on at least one senior level person mutually selected by the company, CTEK and the fund, Held said. The person would not be an adviser, but someone compensated for eight to 16 hours of work per week in whatever area the company needs help with - marketing, sales, operations and so on.
Any of the fund's deals would be syndicated to CTEK Angels as well, Held said. "So if the company needed $750,000, the fund may put in $600,000 and $150,000 the angels could piggyback onto."