UA Official Says State Needs Venture Capital

By Lana Flowers

Posted: November 13, 2009 at 6:13 a.m.

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SPRINGDALE — Arkansas needs more venture capital to provide seed money to startup companies and develop high-paying jobs, so the state’s “best and brightest” don’t move to Dallas, Austin, Texas, and to Boston, said Jeff Amerine.

He is the technology licensing officer at the Sam Walton College of Business at the University of Arkansas in Fayetteville.

Amerine and Jeff Stinson, executive director of the Fund for Arkansas’ Future, spoke at Springdale Chamber of Commerce economic summit at the Northwest Arkansas Convention Center in Springdale.

Stinson said venture capital matters because there are only two ways to get new companies: Recruit them or grow your own.

That’s where the Fund for Arkansas’ Future comes in. The for-profit private equity fund earns money for investors while investing in startup companies.

“If we make good investments in good companies that have the ability to grow, then job creation is a natural extension,” Stinson said.

The Fund for Arkansas’ Future made 17 investments in 11 companies since the fund was created, Stinson said.

About 57 high-net worth people started the fund in January 2005 after spending all of 2004 raising money, Stinson said. The fund typically invests between $100,000 and $1 million in startup firms.

Money is not all it takes to start new firms, Amerine said. Startups also require universities and private firms to research and entrepreneurs to take risks.

That is evident in Duralor, a Springdale nanotechnology plant that opened in May, said Ajay Malshe, University of Arkansas 21st Century professor of materials, manufacturing and integrated systems.

Duralor literally is a cutting edge company, using microscopic particles to strengthen cutting tools used in the automotive industry and by companies such as Kennametal in Rogers, that make industrial machine cutting tools.

Duralor employees earn about $60,000 per year on average and the plant uses an electrostatic process to bond titanium nitride to cubic boron nitride, a hard, manmade material. That coating is then applied to machine and cutting tools.

The coating makes the tools last longer, eliminates the need to flood cutting machines with fluid to reduce heat and friction and allows workers to cut faster, said Malshe, lead inventor of the Duralor coating.

Fayetteville also has an incubator for startup companies in the Arkansas Research and Technology Park. It has 27 public and private affiliates working and doing research. The park eventually will provide more than 2,000 jobs, said Phillip Stafford, president of the University of Arkansas Technology Development Foundation, which manages the research and technology park.

The park features an enterprise center that is about 75 percent complete, Stafford said. The enterprise center will provide facilities startup companies need, such as wet laboratories and clean rooms.

The park and its affiliate firms created 200 jobs and an additional 100 jobs supporting research and development in 2009, Stafford said.

The goal is to create jobs to keep university graduates in the state, earning salaries as high as $72,000 in the first year after college, Stafford said.

The research and technology park and its affiliates received $12 million in 2006 though the federal Small Business Innovation Research Program, Stafford said.

The park and its affiliates received just more than $6 million in 2008, according to Stafford.

“This is the seed money that new firms rely on,” especially those conducting high-risk, high-reward research that takes years, he said.

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