N.H.-focused venture capital fund sets $30 million goal, announces first 3 investments

Last modified: 5/16/2013 4:11:48 PM
Three state companies are getting an undisclosed amount of money from a new venture capital fund set up in part by the New Hampshire Business Finance Authority.

Organizers of the Borealis Granite Fund, including the BFA and Hanover-based Borealis Ventures, yesterday announced its first recipients of funding would be Manchester-based Mosaic, which provides cloud storage for digital photographs; Lebanon-based Avitide, which makes biopharmaceutical purification technology; and Dyn, a Manchester-based company that says it specializes in “Internet Infrastructure as a Service.”

Organizers said their goal is to raise an initial $30 million from local institutions and other investors. Jesse Devitte, a Borealis managing director, declined to say how much money has been raised so far, except to say they’ve made “healthy progress.”

He also declined to say how much would be invested in each of the three companies.

The fund’s first $4.5 million is coming from the Business Finance Authority, using federal money from the State Small Business Credit Initiative that was awarded in 2010, said Jack Donovan, executive director of the quasi-public agency.

In 2011, the Legislature authorized the BFA to establish an “innovation business job growth program” to help increase the amount of venture capital available to New Hampshire companies. The result is the Borealis Granite Fund, which Borealis Ventures will manage.

“It’s the first venture capital program solely committed to the state of New Hampshire, so the focus is all on New Hampshire and our businesses,” Donovan said yesterday.

Donovan said the BFA’s initial $4.5 million investment will help convince private companies and individuals to invest money through the fund. He said the BFA will let those private investors be paid back first, to help them protect their investment.

“Essentially it’s a first-in, last-out structure, which provides support to the other private investors in the fund,” Donovan said. “We adopted this structure because we’re trying to expand the venture capital investment class in the state. We think this structure, by providing the downside protection, makes it attractive for institutional investors.”

But, Donovan said, the fund is privately run and “there’s no state exposure.” He described it as “just the opposite” of the situation in Rhode Island, where the state Economic Development Corporation in 2010 guaranteed $75 millions in loans to 38 Studios, former Boston Red Sox pitcher Curt Schilling’s video game company. When the company went belly-up last year, the state found itself on the hook to repay the principal and interest.

Gov. Maggie Hassan, a Democrat, attended yesterday’s announcement.

“I truly believe that New Hampshire is at the threshold of a bright new future, and that we are as well positioned as any state to lead the country in innovative economic growth that will lift all of our people, and it is really going to define the 21st century,” Hassan said.

(Ben Leubsdorf can be reached at 369-3307 or bleubsdorf@cmonitor.com or on Twitter @BenLeubsdorf.)


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