UTIMCO backs research fund
UT fund to invest in life-sciences startups
By Robert Elder Jr.
Wednesday, November 12, 2003
The University of Texas System is putting $25 million behind the idea that state research laboratories could be a wellspring for investment profits.
The University of Texas System Investment Management Co. said Tuesday it will invest the money in a new venture capital fund, PTV Sciences LP, that focuses on life sciences technologies emerging from research at UT and other schools.
PTV, which says it has raised $55 million of an expected $60 million investment fund, is also backed by Cockrell Interests of Houston and Houston billionaire investor Fayez Sarofim. The Cockrell family, whose fortune is derived from oil and other mineral interests, is a major donor to the UT System.
"This is kind of virgin territory," said Bob Boldt, UTIMCO's president and chief executive officer. "There's a lot of great research being done in Texas that isn't being looked at with the same intensity" as is happening in life sciences and biotechnology strongholds such as Boston and Southern California.
PTV is investing in fledgling companies. Biosciences advocate Tom Kowalski said the new investment fund will help fill the biggest need Texas companies have: finding seed money to get started.
The PTV fund "bodes well for new technologies and new companies, and it is the one thing we really need," said Kowalski, executive director of the Austin-based Texas Healthcare and Bioscience Institute. "If the early money is not there, companies will follow the money trail and move (elsewhere)."
UTIMCO manages $14.7 billion in endowment funds for the UT and Texas A&M systems. The amount committed to PTV is small compared with the $175 million UTIMCO has put into other venture capital funds.
But Boldt said the new investment is part of a larger effort by the UT System to commercialize technologies developed on campus and at institutions such as the UT System M.D. Anderson Cancer Center in Houston and the UT Southwestern Medical Center in Dallas.
"This should be considered the first drop in the bucket, and that's really what it is," Boldt said.
Matt Crawford, an Austin-based managing director of PTV, said the fund will invest in companies developing treatments for medical conditions and medical devices. Crawford said there's a disconnect between the large amount of federal research dollars that flow to Texas and the relatively few businesses that emerge from the state's laboratories.
PTV has invested small amounts in two companies whose products are rooted in M.D. Anderson -- IDev Technologies, a medical devices company, and InterPath Pharmaceuticals Inc., which is developing therapies to treat leukemia.
M.D. Anderson and UT-Southwestern are well versed in commercializing technology developed in their labs. UT-Southwestern created an Office of Technology Development in 1998, which has since launched three startups.
Crawford said Texas' life sciences industry has "a long way to go."
"We can't kid ourselves," he said. Crawford said he hopes the $60 million PTV wants to invest "will spur more investment in the area."
The PTV fund is small as venture funds go, Crawford said, "so we've got to pick our spots pretty carefully." To attract additional investors, he said, "we're going to have to show tangible evidence of successful companies that are homegrown."