Fund targets emerging companies
By Don Mecoy
November 17, 2005
The state of Oklahoma is the largest investor in a new $12 million venture capital fund that will help finance emerging companies.
At least 80 percent of the Mesa Oklahoma Growth Fund must be invested in state-based companies, fund manager Gregory J. Edwards said Wednesday.
The Oklahoma Capital Investment Board, which also participated in the public-private deal that lured the New Orleans Hornets to Oklahoma City, was the lead investor in the Mesa fund. Other investors include about 20 "prominent" Oklahoma City and Tulsa business people, Edwards said.
"I'm not going to tell you their names, but if I did, you would recognize them," Edwards said. Edwards, a former bank executive and president of CMI Inc., heads Cass Holdings, a private Oklahoma City company.
Investment board President Devon Sauzek said the board's participation supports its mission to boost the venture capital industry in Oklahoma. Since 1993, the board has invested in 16 venture capital funds, which have attracted more than $100 million to Oklahoma projects.
"Mesa has a good strategy for locating Oklahoma companies positioned for growth," Sauzek said in a statement. "The Mesa principals have a solid history of creating value within companies they have managed or supported."
Mesa has begun evaluating potential investment targets, Edwards said.
"Our intention is to invest in Oklahoma specifically," Edwards said. "We do have the latitude to do 20 percent outside the state. But we're based here, so this is where we're looking."
The fund plans to participate in deals of about $1 million, Edwards said, which is smaller than the average venture capital deal. The Mesa Fund can invest up to 15 percent of its capital in any single deal, he said.
The fund managers are not interested in start-up companies, Edwards said.
"They have to have a business plan, but they have to have a business, as well," he said. "We're not going to start businesses. We're going to work with entrepreneurs that have a particular niche and product or service that is valuable and viable and can be built with proper capitalization."
Like billionaire superstar Warren Buffet, Edwards and his co-managers, W. Douglas Frans and Moritz P. Schlenzig, plan to invest in growth companies with products and services they clearly understand.
"We are not limiting investment opportunities for the fund to a few target industries," Frans said. "There is an underserved market for smaller companies, particularly in Oklahoma, which generally fail to receive proper attention from larger venture funds. Our management team also has the expertise to assist entrepreneurs in leveraged and management buyouts."
If the fund's investments prosper, the endeavor will grow, Edwards said.
"If we're successful, you will see Mesa Oklahoma Growth Fund II and Mesa Oklahoma Growth Fund III," Edwards said. "Hopefully, this is not a one-shot deal."