Venture Capital Report


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Venture Capital Report

  1. 1. = Greater St. Louis 2004 Venture Capital Report June 2005 produced by The St. Louis Capital Alliance
  2. 2. The St. Louis Capital Alliance 2005 Managing Committee Chairman Andrew T. Hoyne C. Brendan Johnson Partner Counsel Armstrong Teasdale LLP Bryan Cave LLP Robert A. Beardsley, Ph.D. Bradley R. Morrow President and CEO CFA, Senior Vice President Kereos Inc. Summit Strategies Group John Bodnar Bryan Muehlberger Member Manager, Data Center Services Lewis, Rice & Fingersh, LC Pfizer Inc. Andres Bonifacio Michelle E. Murray Vice President Chief Financial Officer MRM Asset Allocation Group Prolog Ventures LLC The St. Louis Capital Alliance was formed by Jim Brasunas Matthew Roberts the St. Louis Regional Chamber and Growth Association’s Technology President and CEO Director of Technology Transfer Gateway Council in 2005 to help develop a vibrant venture capital Technology Entrepreneur Center and New Ventures Nestle Purina environment in the St. Louis region through: Charles Bridge Partner Donn Rubin • Raising the St. Louis venture capital profile locally, Brooke Private Equity Advisors Executive Director nationally and globally Coalition for John F. Brooke Plant and Life Sciences • Leveraging St. Louis’s financial resources Partner Brooke Private Equity Advisors J. Joseph Schlafly, III • Supporting programs and infrastructure that generate Senior Vice President compelling investment opportunities Robert Calcaterra Stifel, Nicolaus & Company Inc. President and CEO • Encouraging collaboration among organizations supporting The Nidus Center Joseph Soraghan Partner the growth of the St. Louis venture capital community Gian Calvallini Danna McKitrick, PC Director, Investment Banking • Gaining public support of venture capital by working with A.G. Edwards and Sons Inc. Mark Stoneman government leaders Partner Pamela F. Campbell Armstrong Teasdale LLP • Providing networking opportunities across the St. Louis Director of Investments financial community Washington University Phil Thomas Vice President • Increasing the awareness and involvement of senior St. Louis Marie N. Carlie Advantage Capital Partners Principal financial personnel in St. Louis venture capital matters Stone Carlie Christine Walsh Executive Director Robert Coy InvestMidwest Senior Vice President, Entrepreneurial Development Thomas Walsh St. Louis RCGA Partner Sonnenschein, Nath & Rosenthal Jeremy R. Degenhart Senior Associate Advantage Capital Partners Chris Dornfeld The St. Louis Capital Alliance Director, One Metropolitan Square Entrepreneurial Collaboration Suite 1300 Washington University St. Louis, Missouri 63102 Telephone (314) 444-1130 Fax (314) 206-3222
  3. 3. Greater St. Louis 2004 Venture Capital Report A ccess to venture capital is a key component to creating Progress is clearly being made and the foundation for further a successful entrepreneurial technology industry in a venture capital activity in St. Louis continues to strengthen. region. Without venture capital access, companies can- In order to build upon and accelerate this venture capital not attract funding to grow. Without access to venture capital, momentum, The St. Louis Capital Alliance was formed in early new ideas that could evolve into companies go elsewhere, prom- 2005 by the Technology Gateway Council of the St. Louis ising early-stage companies are forced to move or close down Regional Chamber and Growth Association (RCGA). RCGA due to a lack of funding, company growth is slowed due to is the regional chamber of commerce and economic develop- financing delays, and companies lack the funds to reach critical ment organization for the 16-county, bi-state region. RCGA milestones. To that end, the St. Louis business and civic leader- established the Technology Gateway Council in 1998 to address ship has undertaken a concerted effort to stimulate venture capital challenges facing capital formation, entrepreneurship and business investment in the region. This Annual Venture Capital Report development of the St. Louis region’s high tech companies is designed to benchmark and track venture capital activity in our region over time. As documented in this report, St. Louis This dimension of the region’s economic development effort is has made significant progress over 2004 and into 2005 toward bringing together representatives of the St. Louis venture capital, achieving a critical mass of talent, innovation, and capital necessary finance, corporate, pension, academic and entrepreneurial for a vibrant venture capital environment in the St. Louis region. communities, in order to leverage our collective strengths and Highlights included: resources to attract more venture capital investment to St. Louis. • Stereotaxis’ $48 million initial public offering led by A number of individuals contributed to this report, including: Goldman, Sachs & Co., with Bear, Stearns & Co. Inc., Bryan Muehlberger (Pfizer), Mark Stoneman (Armstrong Deutsche Bank Securities Inc. and A.G. Edwards & Teasdale), Michelle Murray (Prolog Ventures), Carter Sons Inc. as co-managers. Williams, Mark Lewis (Two Rivers Advisors), Bryan Bezold and Monica Conners (RCGA), Tom Melzer (Rivervest Ventures), • The $81.5 million funding of Vectis, a fund-of-funds, Greg Johnson (Prolog Ventures), Joe Schlafy (Stifel, Nicolaus with a strong St. Louis focus. & Co.), James O’Donnell (Bush/O'Donnell) and Brendan • Oakwood Medical Venture’s raising of $43 million and the Johnson (Bryan Cave). Special thanks to Bob Coy of the anticipated final closing of Prolog Ventures’ $50 million RCGA for spearheading this project and to St. Louis Commerce second fund. Magazine for their design and publication of this Annual Venture Capital Report. • $120 million of venture investment in nineteen St. Louis companies during 2004. The Alliance has a number of plans for the upcoming year. Please feel free to contact Bob Coy, Senior Vice President • Since 2000, over $800 million of venture capital has been for Entrepreneurial Development, St. Louis RCGA, at invested in St. Louis companies. (314) 444-1130,, or any member of the • Triathlon Medical Venture’s establishment of an office in Managing Committee to discuss ideas and your participation. St. Louis following the closing of its $96 million offering. Sincerely, • Arch Development’s new presence in St. Louis. • Continued development of the St. Louis facility infrastructure as CORTEX broke ground on a 165,000-square-foot multi- tenant laboratory in central St. Louis. William Peck, MD Andrew T. Hoyne • Hosting of BIO MidAmerica and InvestMidwest venture Chairman Partner RCGA Technology Armstrong Teasdale LLP capital forums. There is clear deal-flow in St. Louis; for Gateway Council Chairman example, of the 60 life sciences selected by the BIO screening St. Louis Capital Alliance process to present, 21 were from St. Louis. • The launch of Arch Angels, a new St. Louis-based angel network. 1
  4. 4. ST. LOUIS PEOPLE T Population: 2.7 Million State of the Greater St. Louis Region’s T Percent of U.S. Population within one day’s drive: 33% T Percent of population between Venture Capital Industry 2004 Annual Report the ages of 20 and 34: 20% T Number of engineers, archi- tects, scientists and computer professionals: 67,490 or 5.3% of workforce which is above the U.S. average. The science that has emerged from both Washington University and Saint Louis University is absolutely T Number of persons employed in healthcare: 105,600 or 7% remarkable. The venture capital community here in St. Louis reminds me of Boston in the 1970s, in that it’s of workforce comparatively small now; but St. Louis has all of the raw materials to become a great region for venture capital investment. Peter Brooke, Chairman and Founder of Brooke Private Equity Advisors and Founder, Boston-based Advent International Corporation and TA Associate 2004 was a year of continued progress 2004 Venture Capital toward achieving a critical mass of talent, Investment Activity innovation and capital necessary for a Venture capital firms invested $119 million in vibrant venture capital environment in the 19 regional companies in 2004. The invest- St. Louis region. Two established venture ments were concentrated in two industry capital funds and a new fund-of-funds raised segments that reflect the indigenous strength close to $200 million; two out-of-town of the St. Louis region—biotechnology/ funds established a St. Louis presence; venture medical devices (ten firms) and information capitalists invested over $120 million in technologies (eight firms), which includes nineteen companies; the region enjoyed a computers, software, semiconductors and $48 million venture-backed IPO; a new telecommunications. Venture capital funds angel investor network was organized; and a from California, Colorado, Florida, Illinois, T Over $3.0 billion has been invest- number of strategic alliances were estab- Indiana, Massachusetts, Missouri and Texas, ed in the revitalization of the lished between venture-backed and large City of St. Louis in the past four as well as internationally from Canada and technology companies. These developments, the Netherlands, participated in these years. The new Busch stadium on top of the over $816 million of venture financings. There also were a number of will be completed in 2006, and capital invested in technology firms in the noteworthy angel investments in regional downtown revitalization projects include new lofts and housing, St. Louis region since 2000, are establishing biotechnology and IT companies that rehabbed historic buildings and the St. Louis region as a center of innovation should provide new opportunities for ven- new shopping and entertainment in the Midwest that is attracting the atten- ture capital firms in 2005. districts such as Washington Ave. tion of venture capital firms throughout the region, the United States and Europe. 2
  5. 5. Greater St. Louis 2004 Venture Capital Report COMPANY AMOUNT (M$)1 INDUSTRY ST. LOUIS PEOPLE Metaphore Pharmaceuticals2 $ 40.2 Biotechnology T Higher education student AGEIA Technologies Inc. $ 21.8 Semiconductors enrollment: 167,498 Stereotaxis Inc. $ 16.0 Medical devices and equipment 3 T 2nd Best University for MetaMatrix $ 12.0 Data integration software Post Doctorates: Washington Centerre Healthcare Corporation $ 5.0 Healthcare services University in St. Louis Divergence $ 4.0 BioTechnology ISTO Technologies $ 3.5 Tissue Engineering Appistry Inc. (fka Tsunami Research, Inc.) $ 3.0 Application fabric software Quick Study Radiology $ 2.3 Health care IT/services New Century Packaging $ 2.0 Industrial/energy Everest Biomedical Instruments $ 2.0 Medical device Vibe Solutions Group $ 2.0 Video communications software Singulex $ 1.4 Medical device NetLogic $ 1.1 Telecommunications Xspedius Holding Corporation $ 1.0 Telecommunications T3 (Transaction Transport Technologies) $ 1.0 Payment processing Exegy $ 1.0 High speed data search APT Therapeutics $ 0.3 Drug discovery Kereos $ 0.1 Drug delivery Total $119.7 Source: DowJones Venture Source; PriceWaterhouseCoopers MoneyTree; St. Louis venture capital industry sources. T 3rd Best Medical School in the Initial Public Offerings (IPO) and chambers of the heart to target sites and Nation: Washington University In August, 2004, Stereotaxis Inc., the devel- then to effect treatment. in St. Louis oper of an advanced cardiology instrument Stereotaxis’ technical and entrepreneurial control system for use in a hospital’s inter- roots go back to the late 1980s at the T Number of area graduates ventional surgical suite for the treatment of University of Virginia Medical School, or faculty to receive Nobel coronary artery disease and arrhythmias, Prize: 22 where two professors, Matthew Howard and closed a $48 million initial public offering.4 Sean Grady, did their initial work on mag- T Saint Louis University is the The Stereotaxis system is designed to allow netic navigation, in partnership with Rogers oldest institution of higher edu- physicians to more effectively navigate pro- Ritter, a physicist experienced in magnetic cation west of the Mississippi. prietary catheters, guidewires and stent levitation and steering. In 1990, Menlo Park, delivery devices through the blood vessels California-based Sanderling Ventures and T St. Louis engineers played a significant role in the “Race to Space.” The Mercury and 1 If a company received both institutional venture capital and angel capital in 2004, the total amount invested includes both the institutional and angel capital. Gemini space capsules that 2 Metaphore was founded by Garland Marshall, Ph.D., a Professor at Washington University School of Medicine, with carried Alan Shepard and John technology licensed from Monsanto and developed by a team led by Denis Forster, Ph.D. Dr. Forster left Monsanto Glenn were both designed and to become the first CEO of Metaphore. While CEO, he raised $20 million in the A and B rounds organized by a manufactured in St. Louis. syndicate led by Stifel, Nicolaus & Company Inc. Metaphore has raised $100 million to date. The company’s head- quarters is now in New Jersey and its research operations remain in St. Louis. 3 MetaMatrix was founded in St. Louis. Its CEO and a small sales force are in New York; 85 percent of the employees are in St. Louis. 4 This history of Stereotaxis was provided by Greg Johnson, Ph.D., managing director, Prolog Ventures. Dr. Johnson was a general partner at Gateway Ventures and played the lead role in organizing local investors in the Series B round that brought Stereotaxis to St. Louis. 3
  6. 6. ST. LOUIS FACTS an angel investor took an interest in the include St. George Hospital (Hamburg) and project and provided the first seed capital. Thorax Hospital (Rotterdam). T 18th largest city in the U.S. The company moved to California. In 2004, Stereotaxis announced that it will T 4th largest city in the Midwest In late 1994, Stereotaxis, with only two be moving its headquarters from the Center employees, relocated from California to an for Emerging Technologies to a new T The Gateway Arch, at 630 feet, office at Barnes Jewish Hospital in St. Louis 165,000-square-foot building being con- is the tallest man-made nation- to work with Dr. Ralph Dacey, chief of structed near the Washington University al monument, standing twice neurosurgery at the Washington University School of Medicine by CORTEX, a regional as tall as the Statue of Liberty. School of Medicine, who was an early initiative to establish additional life sciences supporter of magnetic navigation. The move companies in St. Louis. T Home of one of the top culinary was facilitated by a $5 million Series B “little Italy” neighborhoods in The success of Stereotaxis demonstrates that financing organized by Gateway Associates, the country, “The Hill” is the significant new life science companies can be a St. Louis-based venture capital firm. Other boyhood home of some of built in the St. Louis region. Key factors were America’s baseball legends participants in the financing were the technology and senior management, including Yogi Berra, Joe Sanderling Ventures and Alafi Capital, both both of which were imported, and $12 mil- Garagiola and Jack Buck. California-based, and St. Louis-based lion of critical early-stage financing during Emerson, Barnes Jewish Hospital and 1995-98, much of which was provided by T Of the top 20 largest U.S. Oakwood Medical Investors. metropolitan areas, St. Louis St. Louis firms. Stereotaxis raised an additional $12 million ranks as the 4th best MSA for home ownership. in Series C financing in 1998. New St. Louis- based investors were A.G. Edwards, Advan- Strategic alliances tage Capital, and BOME Investors. In 2004 also included establishment of a addition, the financing attracted regional number of strategic alliances between funds such as C.I.D. Equity Partners of venture capital-backed and established Indianapolis and Greystone/Portage Ventures technology companies. These arrangements of Chicago. St. Louis-based Prolog Ventures provide important validation of a startup also participated in later rounds. About this company’s technology, as well as research time, Stereotaxis relocated from Barnes support, other funding and collaborative Jewish Hospital to larger quarters in the technology development. A sampling of Center for Emerging Technologies, a tech- these alliances includes: nology business incubator located close to • Kereos Inc., which develops targeted the Hospital and the campus of Washington therapeutics and molecular imaging agents University’s School of Medicine. that detect and attack cancer and cardio- Altogether, Stereotaxis raised $130 million vascular disease earlier and more specifi- of equity prior to its August 2004 IPO. cally than previously possible, announced Much of the later capital came from funds strategic partnership agreements with located outside the Midwest, such as Advent Bristol-Myers Squibb Medical Imaging T Forest Park is one of the largest International and Ampersand Ventures of and Dow Chemical in 2004. Kereos, urban parks in the U.S., home Boston and E.G.S. Capital of New York, as which also has a long-standing relationship to the nation’s largest outdoor well as strategic investments from Siemens with Philips Molecular Imaging Group, theater, The Muny, and the and J&J Ventures. was selected as one of the “Fierce 15” of nationally acclaimed St. Louis the top emerging biotechnology compa- Zoo. At 1,371 acres, Forest Today, Stereotaxis’ U.S. customers include Park is 500 acres larger than nies for 2004 by FierceBiotech, an Barnes Jewish Hospital, Central Baptist New York City’s Central Park. internationally-recognized publication for Hospital (Lexington, KY), and Massachusetts the biotech industry. General Hospital. International customers 4
  7. 7. Greater St. Louis 2004 Venture Capital Report • Divergence Inc., a world leader in the make investments in life science venture ST. LOUIS FACTS application of genomics to parasitic and capital funds with ties to Greater St. Louis T The largest mosaic collection in infectious disease in agriculture, and Missouri. To date, Vectis has invested in the world graces the halls of the announced a collaborative relationship St. Louis-based Prolog II and Oakwood Cathedral Basilica of St. Louis, with St. Louis-based Monsanto to develop Medical Investors IV, as well as Advent with over 41,000 pieces of glass. nematode-resistant soybeans. As part of Health Care Life Sciences, CMEA Ventures the collaboration, Monsanto will gain IV, HealthPoint Partnership, Accuitive T Grant’s Farm, the former exclusive rights to Divergence’s existing Medical Venture Partners I, and Prospect homestead of Ulysses S. Grant, technology in this area and provide funding Venture Partners III. The non-St. Louis- is the only house still standing for ongoing research. Divergence will also based funds have agreed to actively consider that was built and occupied by receive milestone payments based on investment opportunities and syndications a U.S. president. research and development success, and roy- in St. Louis. Vectis is part of a strategy to alties once products reach the marketplace. build the region’s life science industry by attracting the attention of venture capital • Chlorogen Inc., which uses a patented firms on the East and West coasts to the excel- chloroplast technology to manufacture lent investment opportunities in St. Louis. plant-made drugs and vaccines for the treat- Investors in the fund include The Danforth ment and prevention of human diseases, Foundation, the James S. McDonnell Foun- signed a joint development and supply dation, Washington University, Missouri agreement with St. Louis-based Sigma- Foundation for Health, Ameren Master Aldrich Fine Chemicals. This collaboration Retirement Trust, University of Missouri is expected to produce the first commercial System pension fund, Barnes-Jewish Founda- products from chloroplast transformation tion, Sheet Metal Workers’ Local 36 pension technology. Sigma-Aldrich will fund an fund, and McCarthy Building Companies. undisclosed portion of Chlorogen’s efforts to produce four specific proteins in tobacco Prolog Ventures, a venture capital firm plants. The proteins will be sold to the specializing in life sciences and related infor- reagent and cell culture markets and mation technologies, closed its first fund in have pre-identified applications as active 2001 and had the final closing of its second T The Missouri Botanical Garden pharmaceutical ingredients. fund, Prolog II, a $66 million fund, in June is among the top three botani- 2005. cal gardens in the world. New Funds Established in 2004 The region surrounding St. Louis is ranked among the T The St. Louis area offers more Thirteen venture capital funds with over highest in terms of NIH funding (a good proxy for the than 50 hiking, biking and $925 million of capital under management quality of this technology), yet it ranks among the lowest walking trails. A 200 square are headquartered in St. Louis, with over in venture funding. We see this as a unique opportunity. mile nature, conservation and $400 million of venture capital raised by Brian Clevinger, recreation area is being formed St. Louis-based venture capital firms since Managing Director, Prolog Ventures around the confluence of the 2000. Reflecting the opportunities in the Missouri and Mississippi Rivers. Oakwood Medical Investors, a life science region, a fund-of-funds was established and venture capital fund based in the region, T St. Louis is the birthplace of two venture capital firms raised new funds. closed Oakwood Medical Investors IV in many famous writers including In addition, two venture capital firms head- 2004 at $43 million. T.S. Eliot, Maya Angelou, quartered outside the region established a William Gass, Tennessee presence in St. Louis. Triathlon Medical Ventures, a Cincinnati- Williams, Eugene Field, Vectis Life Sciences Fund I, an $81.5 million based biomedical fund with $96 million Jonathon Franzen. fund-of-funds established to help provide under management, opened its doors in funding for the area’s plant and biomedical St. Louis in 2004 so it could be near the sciences, closed in January 2005. Vectis will region’s life science opportunities. 5
  8. 8. ST. LOUIS BUSINESS St. Louis stood out in our view by having world-class to be $200,000 to $2 million per company. biomedical research, sophisticated early-stage venture Angel-backed companies are expected to be T Working population: 1.44 million capitalists locally with whom we could co-invest, two an important source of deal flow for venture life science incubators and a life sciences seed fund, capital firms. T Fortune 500 headquarters: nine BioGenerator. All this makes St. Louis a compelling location to create and grow new life science businesses. T Fortune 1000 company Engines of Innovation headquarters: 21 John Rice, Managing Director, The life science focus of many of the region’s Triathlon Medical Ventures. venture capital firms reflects the depth of the region’s research and corporate base and Arch Development Partners, a $4 million an organized business and civic leadership seed stage life sciences fund based in focused on developing the region’s life Chicago, established a presence in the science industry. The region has significant St. Louis region to tap into early stage IT and advanced manufacturing assets as opportunities spinning out of the region’s well. Key sources of innovation, talent and research institutions. entrepreneurial support can be found Arch is excited about the St. Louis opportunity, because throughout the St. Louis region, and include: it offers a nearly unique Midwestern combination • Saint Louis University and Washington of great science and technology supported both University and their schools of medicine nationally and locally, a sophisticated management are significant sources of technological pool, and a civic commitment to creating a successful innovation and talent. entrepreneurial environment. • Washington University’s School of Medicine Tom Churchwell, Managing Partner, was ranked second in the country in NIH Arch Development Partners awards in 2003. Since 1927, 21 Nobel Laureates have been associated with Washington University. In 2004, Washington St. Louis Angel Investors Emerge University launched a program with financial In addition to traditional venture capitalists, support from the Kauffman Foundation to angel investors are taking heed of the invest- make entrepreneurship education avail- ment opportunities in St. Louis. Aptly able across campus and transform the named, the St. Louis Arch Angels’ mission is way entrepreneurship is viewed, taught to provide opportunities for members to and experienced. obtain financial returns by investing in • The Danforth Plant Science Center, one early-stage companies with high growth the largest independent research institutes potential in the St. Louis region, and acceler- in the world dedicated to plant genomics, ate them to market leadership. Organized in and the Missouri Botanical Garden, one of late 2004, the network was launched in the the world’s premier botanical research T Number of hotel rooms within first quarter of 2005 and is expected to grow one mile of America’s Center, institutes, are both significant magnets for to 50 members in the first year. Each member the St. Louis Convention talent and innovation in the region. has agreed to invest a minimum of $50,000 Center: 7,600 per year in start-up companies. Equally • Corporations such as Monsanto, Sigma- important, the members have agreed to con- Aldrich, Pfizer, Nestlé Purina, Centocor and T Total retail sales: $30.89 billion, tribute in other ways, including helping to Tyco Healthcare/Mallinckrodt generate of which 10% is attributable to source deals, perform due diligence, serve on technology and talent that enrich the ecosys- visitor expenditures boards of directors and provide mentoring tem for regional life science companies. assistance to start-up companies. The Advanced manufacturing and IT companies investment range of the network is expected such as Boeing, whose defense division is 6
  9. 9. Greater St. Louis 2004 Venture Capital Report headquartered in the region, Emerson and agement, and a strong and growing university ST. LOUIS BUSINESS SBC also are important sources of technology, and corporate technology base, the region management and technical talent. has the talent, technology and capital for T Percent of households with income of $100,000 or venture capital-backed enterprises to • The region is now home to 30 early stage more: 14% emerge and thrive. life science companies that together have raised over $310 million. Evidence of the While much of the region’s focus since 2000 T Average household income: strength of these companies was reflected has been on building the financial, physical, $59,209 at BIO’s Mid America Venture Forum, and social infrastructure to capitalize on its which was held in St. Louis in 2004. Sixty T Total household income: significant base of plant and biomedical $84.4 billion life science firms from across the Midwest assets, attractive investment opportunities were selected through rigorous review are emerging in other industries, including process to present their business plans to information technology, advanced manufac- the venture capital community, twenty- turing, and even retail, where St. Louis- one of which were from Greater St. Louis. based Build-a-Bear Workshop had an initial public offering in 2004. • The annual Missouri-based InvestMidwest Venture Capital Forum, which is recognized As Stereotaxis and similar examples demon- as one of the Midwest’s premier venture strate, the region can attract technology and capital events, has helped participating talent who recognize a promising environ- firms raise over $200 million from private ment for building businesses. Top executive equity investors. and scientific talent from the East and West • The region has two world-class life science coasts, who are often unfamiliar with incubators—the Nidus Center for Scien- St. Louis, are surprised by the lifestyle tific Enterprise, located on the Monsanto amenities they find here, including a world corporate headquarters campus near the class symphony, zoo, science center, botanical Danforth Plant Science Center, and the garden; first class art and history museums; Center for Emerging Technologies, located a full range of neighborhood options— in close proximity to Washington and urban, older inner-ring suburbs, suburban, Saint Louis University Schools of and rural; excellent air service and central Medicine. Technology Entrepreneur location for executives who must travel to all Center (TEC), a new IT incubator, regions of the country; professional baseball, T Annual number of visitors: recently opened to serve the needs of football and hockey; excellent public and 16.7 million startup firms in this industry cluster. private schools; an impressive base of scien- tific and technological talent; an attractive T Top 20 U.S. location for Plant St. Louis has made more progress in the implementa- cost of living; and a business, education and and Life Sciences; Top 10 U.S. tion of its plant and life sciences strategy than any civic leadership dedicated to continually location for Logistics and region of the country and is well on the road to becom- improving the environment for innovation Distribution, Home to world’s ing the leading center for the plant sciences and a major and entrepreneurship. largest brewer, Anheuser-Busch. center for the life sciences. Walt Plosila, As venture capital legend Peter Brooke has T Top three largest St. Louis Vice President, Technology Partnership noted, St. Louis has all the ingredients to employment categories: Practice, Battelle Memorial Institute, 2004 become a region for great venture capital investment, and is positioning itself well for 1. Transportation/Utilities 2005 and beyond. Beyond his good words, 2. Education/Health Care Building Businesses Brooke also closed an $81.5 million life in the St. Louis Region 3. Business & Professional sciences fund-of-funds in St. Louis in 2004. With twenty-one Fortune 1000 companies, Services over $1 billion of venture capital under man- 7
  10. 10. ST. LOUIS FIRSTS St. Louis-based Venture Capital Funds – 2004 T First U.S. Kindergarten CAPITAL UNDER YEAR FUND MANAGER VENTURE FUND MANAGEMENT FORMED (Founded by Susan Blow, 1873) Advantage Capital Partners Advantage Capital Partners St. Louis $ 56.5 1992 T First U.S. brewer to use Ascension Health Ventures LLC Ascension Health Ventures Fund I $ 125.0 2001 pasteurization (Anheuser-Busch, early 1870’s) Bush O’Donnell Capital $ 75.0 2003 BioGenerator $ 5.8 2003 T First steel truss bridge (Eads Bridge, 1874) Community Investment Community Investment Partners Partners V, L.P. $ 6.5 1990 T First American city to host an Gateway Associates Gateway I-III, BOME I-III $ 180.0 1984 Olympic Games. (1904) Oakwood Medical Investors Oakwood Healthcare Investors IV $ 77.0 1997 T First ice-cream cone (World’s Prolog Ventures Prolog Capital I - II $ 85.0 2001 Fair, 1904) RiverVest Venture Partners RiverVest Venture Fund I, L.P. $ 89.0 2000 Capital for Business Inc. $ 100.0 1959 Stifel, Nicolaus & Company Inc. Stifel CAPCO Funds $ 30.0 1997 Total $ 829.8 St. Louis-based Fund-of-Funds A.G. Edwards Capital Inc. A.G. Edwards Private Equity Partners $ 228.0 1999 Vectis Fund Vectis Life Sciences Fund I $ 81.5 2004 Total $ 309.5 Venture Capital Firms with St. Louis Branch Offices Triathlon Medical Ventures Triathlon Medical (Cincinatti) Ventures Fund I $ 96.0 2004 T First president to fly in a plane (Teddy Roosevelt at Kinloch Field, 1910) T First non-stop transcontinental Venture Capital Invested flight (Charles Lindbergh, 1927) in St. Louis Region YEAR TOTAL ($M) T First Skyscraper (Louis Sullivan’s Wainwright Building, 1927) 2000 $ 423.9 2001 $ 124.1 T First successful lung removal 2002 $ 72.8 surgery (Barnes Hospital, 1933) 2003 $ 93.2 T First U.S. spacecraft to carry 2004 $ 119.7 man to space was designed Total $ 833.7 and built in St. Louis (Project Mercury, McDonnell, 1959) 8
  11. 11. Greater St. Louis 2004 Venture Capital Report Location of U.S. and European Venture Capital Funds ST. LOUIS FIRSTS Investing in the St. Louis Region in 2004 T First U.S. spacecraft to carry FUND MANAGER HEADQUARTERS LOCATION man to walk in space was designed and built in St. Louis Advantage Capital Missouri (Project Gemini, McDonnell, 1965) Advent Partners United Kingdom Alafi Capital Company California T First PET scanner (Mallinckrodt Institute, 1980) Apex Venture Partners Illinois T First genetically modified plant Ascension Health Ventures LLC Missouri cell (Monsanto, 1982) BA Venture Partners California Baird Venture Partners Illinois Boeing Co & Consolidated Subsidiaries Illinois Capital for Business Inc. Missouri CID Equity Partners Indiana Gateway Associates L.P. Missouri ComVentures California Fletcher Spaght Investors Massachusetts Granite Global Ventures California Health Care Ventures Massachusetts HF Management Indiana Highland Capital Massachusetts HIG Capital Management Florida Life Science Partners BV Netherlands MDS Capital Canada T First inductee to the Rock and Roll Hall of Fame, St. Louisan Merrill Lynch Ventures New York Chuck Berry (Rock and Roll Mi3 Venture Partners Massachusetts Hall of Fame, 1986) Pacesetter Capital Group Texas T First successful human lung transplant (Barnes Hospital, Pacific Venture Group California 1987) Portage Venture Partners Illinois T First U.S. field trials of plants Prolog Ventures LLC Missouri with biotech traits (Monsanto, River Cities Capital Funds Ohio 1987) RiverVest Venture Partners Missouri T First successful nerve transplant Schroder Ventures Life Sciences Massachusetts surgery (Barnes Hospital, 1993) Southeastern Technology Fund Alabama Sterling Partners Illinois 9
  12. 12. Summary of Companies receiving Venture Capital in 2004 Ageia Technologies develops technology to Divergence, a world leader in the application enhance interactive media playback. The of genomics to agriculture and infectious company develops chips for processing three disease, discovers and develops proprietary dimensional visual data for applications such products for the safe and effective control of as computer simulation, gaming, and security. parasitic diseases. Plant parasitic nematodes Its product—PhysX — is a physics semicon- are the largest unsolved pest problem in ductor chip that can enable realistic agricultural chemistry. Despite billions of videogame graphics like crumpling fenders dollars in annual crop damage, current in car crashes, exploding buildings with tons means of control are limited and environ- of debris and a wall of lava that flows like the mentally damaging. Parasitic nematodes also real thing. Ageia employs 100 people. pose major health risks to humans and animals, and resistance to current drugs is Appistry (FKA Tsunami Research) has increasingly a problem in livestock infections. created a software-based environment Breakthroughs at Divergence are demon- providing “fault tolerance” to software strating that comparative and functional applications. Appistry Enterprise Application genomics can revolutionize the future of par- Fabric (“Appistry EAF”) allows applications to asite control in plants, animals and humans. be deployed with absolute dependability with- out requiring premium hardware. Appistry Everest Biomedical Instruments develops EAF applications are written using a simpli- neurological and brain-state assessment fied development model, are scalable to hun- devices. The products consist of low cost dreds of processors and are extremely simple handheld monitors and a recurring revenue to operate. Appistry is selling its product in stream of disposable sensors. The initial the telecommunications, financial services and product monitors depth of anesthesia. The government sectors, and employs 25 people. company is developing a family of handheld brain-state assessment devices capable of APT Therapeutics is a developer of devel- turning those data into clinically relevant opment stage biotech software and drug information that objectively detect critical discovery technologies. The company main- conditions of the brain at the bedside or at tains a strategic focus on small molecule drug the first point of care. It’s current product— optimization (via strategic alliances) while Snap II—combines electroencephalograph building infrastructure to develop propri- and auditory evoked potentials in a portable, etary therapeutic proteins. hand-held, battery-operated anesthesia monitoring device enabling the anestheti- Centerre Healthcare is a provider of inpa- cian to know what is happening in the entire tient rehabilitation services in partnership brain while the patient is under anesthesia. with general acute care hospitals using either Everest employs 20 people. a joint venture or hospital-within-a-hospital platform. The company enables hospitals to Exegy integrates search-optimized data develop or continue to offer high quality storage systems, data mining and business inpatient rehabilitation services that meet intelligence appliances, greatly accelerating their patient and physician needs, while knowledge mining in a data mart environ- minimizing their operational and reimburse- ment. Exegy’s technology is especially ment risk. Centerre employs 100 people. powerful over very large—multi-hundred 10
  13. 13. Greater St. Louis 2004 Venture Capital Report of Terabytes or more—data stores such as unify and deliver information on demand, those utilized by financial services and U.S. across the entire enterprise. The technology intelligence agencies. is for model-driven integration components for Service Oriented Architectures. The Isto Technologies is a developer of engi- company enables organizations to turn their neered tissues and chemical compounds for distributed, disparate, and often cryptic data the repair or regeneration of human tissue into a powerful, comprehensive, and accessi- that has been injured or destroyed by trauma ble information utility. MetaMatrix employs or disease. The company’s technology is 70 people; its customers include Merrill being developed to grow human cartilage Lynch, U.S. and foreign government, SAP tissue from chondrocytes derived from and other Global 1000 companies. human donors. This laboratory-grown carti- lage is intended for surgical implantation to NetLogic is a provider of communications repair or replace injured or diseased cartilage services. The company delivers high-speed in the knee or other joints. Its product— Internet, local, and long distance services, Neocartilage—is an in vitro cultured carti- web hosting services, and inter-city private lage graft that is intended for use in patients line services. The company is currently with early cartilage damage. With early focusing operations in the Midwest United intervention, Neocartilage will help prevent States, employs eight people, and has about the development of osteoarthritis. Isto 500 customers, including UPS, Bobcat, employs 25 people. RF/Max, Radioshack, and SSM Healthcare. Kereos is a developer of targeted therapeutics Quick Study Radiology is a provider of and molecular imaging agents that detect and integrated digital image and management attack cancer and cardiovascular earlier and solutions. The company’s HIPAA compli- more specifically than previously possible, ant components in PACS, image and report and was selected as one of the “Fierce 15” of storage and distribution, scheduling, and the top emerging biotechnology companies billing improve workflow and collections for 2004 by FierceBiotech, an internationally- for hospitals, imaging centers, and radi- recognized publication for the biotech industry. ology professionals. Quick Study employs 26 people and its target customers include Metaphore Pharmaceuticals is a developer hospitals under 300 beds, initially focused in of drugs to prevent and treat inflammatory the Midwest. and autoimmune diseases and disorders, and pain. The company develops small molecule Stereotaxis is a developer of an advanced car- compounds that mimic the activity of human diology instrument control system for use in a enzymes. Its lead compounds mimic the hospital’s interventional surgical suite for the function of superoxide dismutase, a benefi- treatment of coronary artery disease and cial enzyme that serves a protective role in arrhythmias. The Stereotaxis System is the body by removing superoxide, a toxic designed to allow physicians to more effective- free radical that can damage cells and tissues. ly navigate proprietary catheters, guidewires The company currently focuses its clinical and stent delivery devices, through the blood development efforts in the areas of pain, vessels and chambers of the heart to treatment rheumatoid arthritis, and inflammatory dis- sites and then to effect treatment. This is orders, and employs 35 people. achieved using computer-controlled, external- ly applied magnetic fields that precisely and MetaMatrix is a provider of enterprise directly govern the motion of the working tip information integration and enterprise of the catheter, guidewire or stent delivery metadata management solutions. The com- device. The company’s Niobe System is a mag- pany’s solution acts as a virtual database to netic navigation system that digitally navigates 11
  14. 14. the catheter and guide wire based devices Transaction Transport Technologies (T3) along the paths of the heart and cardiovascu- allows "brick and mortar" merchants to cycle lature. NAVIGANT Advanced User Interface-An integrated information and customer credit and debit card transactions faster and/or cheaper through the use of OPPORTUNITY control center that consolidates the key infor- broadband technology. The T3 technology INNOVATION mation sources used by interventional cardi- also allows the greater flexibility in sourcing ologists and electrophysiologists and allows credit and debit card transaction processing DISCOVERY these physicians to provide instrument con- relative to the dominant prevailing technolo- trol directions to precisely govern the motion gies, which is a material cost to many mer- TOMORROW’S HEALTHCARE of the working tip of disposable intervention- chants. The company has established its core This is where the partners of al devices. CARDIODRIVE Automated operations around a server hosting/mainte- Oakwood Medical Investors Catheter Advancer-The CARDIODRIVE nance arrangement with AT&T that includes have invested since 1990. automated catheter advancer is used to the provision of highly scalable, very low Please email us to receive advance and retract the catheter in the cost customer facing bandwidth, and high- additional information on how patient’s heart while the NIOBE magnets speed direct connections into the major Oakwood can advance and grow precisely steer the working tip of the device. credit and debit card processing companies your life sciences company. T3 is beginning the roll-out of its service to Raul E. Perez, M.D., President The company’s domestic customers include the market and has already sold the service Oakwood Medical Investors Barnes Jewish Hospital (St. Louis), Central 439 S.Kirkwood Road, Suite 208 to 526 merchant locations. St.Louis, MO 63122 Baptist (Lexington, KY), Massachusetts General Hospital, Providence (Waco, Xspedius Communications is a provider of Texas), Trinity Mother Francis, University of Oklahoma, University of Iowa, and Rush Presbyterian. International customers integrated communications services to small to medium-sized enterprises in the south- Oakwood Investing to Advance Healthcare ern United States. The company offers inte- include St. George (Hamburg) and Thorax grated voice and data/Internet services to (Rotterdam). residential customers and small and medi- Stereotaxis employs 121 people. um-sized businesses, and offers Internet service through SDSL and T1’s. The com- RiverVest Venture Partners, Singulex is a provider of ultrasensitive pany delivers a comprehensive suite of serv- investing in life instrumentation, assays, and related ices, including local and long distance voice, science innovation reagents for infectious disease, blood data, and dedicated Internet access services, screening, and biodefense. The company in 46 facilities-based markets located in 20 provides an instrument that differentiates states and the District of Columbia. The and counts individual molecules, cells, and company owns, operates, and manages met- microspheres, in solution. The company’s ropolitan fiber optic networks with signifi- instrument enables the user to count thou- cant transmission capacity that cover more sands of particles in a single test, simultane- than 3,500 route miles and allow the compa- ously differentiating multiple molecular ny to manage its own voice and data traffic. species of proteins and nucleic acids. It is Xspedius employs 950 people. capable of detecting nucleic acid hybridiza- tion at the single-molecule level. The tech- Vibe Solutions Group offers a state-of-the nology works in complex and dirty samples art video communications platform that is such as serum or environmental samples. both robust and modular. Partners can choose Unlike PCR, it requires no amplification. from the entire Vibe Communications The company has demonstrated its sensi- Platform, or select one of the application tivity is 100 times greater than a commer- modules for deployment. Vibe’s products cial TSH test and 30 times more sensitive include Vibe Video Phone, Vibe Video Mail, than a commercial PSA test. Singulex Vibe Video Mail Pro, Vibe Media Share, and employs nine people. Vibe Platform. It customers include Comcast, 7733 Forsyth Boulevard, Suite 1650 St. Louis, MO 63105 Charter, Road Runner and Fidelity. T tel: 314.726.6700 fax: 314.726.6715 12
  15. 15. CAPITALIZE ON ST. LOUIS DISCOVERY INNOVATION INVESTMENT EXPANSION CONTACT: Robert Coy Senior Vice President Entrepreneurial Development St. Louis RCGA One Metropolitan Square “ The time is ripe Suite 1300 St. Louis, Missouri 63102 to capitalize on St. Louis.” (314) 444-1130
  16. 16. Vectis Life Sciences Fund I, L.P. $81,500,000 Missouri Based Life Sciences Fund Managed by BROOKE PRIVATE EQUITY ADVISORS St. Louis Boston Using venture capital and management expertise to leverage the life science resources of Missouri: Regional Focus, National Reach, Unparalleled opportunity The undersigned acted as placement agent Stifel, Nicolaus & Company, Inc.
  17. 17. Investment Banking Since 1890 One Financial Plaza 501 North Broadway · St. Louis, Missouri 63102 (314) 342-2134 Creating Venture Capital for Technology and the Life Sciences in Saint Louis Member SIPC and New York Stock Exchange, Inc.
  18. 18. = The St. Louis Capital Alliance One Metropolitan Square Suite 1300 St. Louis, Missouri 63102 Telephone (314) 444-1130 Fax (314) 206-3222