January 12, 2010

Section: Business, Page 5B

High-tech fund meets a local need

(Seed fund plan raises hopes)

Tom Tobin – Staff writer

If Gov. David Paterson has his way, escaping the high-tech “valley of death” will get easier this year.

In his State of the State address, Paterson proposed the creation of a statewide $25 million seed fund to finance and leverage private capital for promising university and corporate research.

For years in the Rochester region, many research advances have languished at the commercial level for lack of startup funds and support. The failure of sustenance at that critical stage has been called the “valley of death.”

“It’s been a long time coming, but this is extremely important for this area,” Theresa Mazzullo, CEO of Excell Partners, Inc., of Rochester, said of Paterson’s proposal, which must be approved by the Legislature.

Excell Partners has led the way locally in bringing venture capital to new businesses arising from university research. “That is a most critical point for business formation,” Mazzullo said.

Mazzullo said capital support is needed at two essential junctures: when researchers decide to develop a marketable prototype of their product; and when a startup firm decides to hire skilled, experienced business people to carry the ball.

University of Rochester Vice President Peter Robinson said the Rochester region, with its wealth of university research and its history of high-tech innovation, is in a good position to benefit from such a seed fund.

“We’re very pleased that the governor has recognized this need in the development of early stage technology businesses,” Robinson said. “There are many such businesses that have died on the vine because of a lack of resources to get to the next stage.” Robinson said that the fund could support work done in corporate labs, such as those at Kodak or Xerox, as well as work emerging from universities.

Sen. Joe Robach, R-Greece, said while such a fund would meet a need in the region and would enhance local competitiveness, the state’s perilous finances and the need to spend less will work against the funding of such an initiative.

The proposal arose from the report of a special task force created to advise the governor on ways to accelerate the commercial development of university research.

Yet, even with the creation of a seed fund, enticing more private venture capital to Rochester and upstate New York remains a challenge.

“I’m optimistic,” said Jim Senall, president of High Tech Rochester, which helps new technology-based businesses develop. “Venture capital will come if they see that a region has growth, has activity. This proposal by the governor could help provide that.”


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