In a Saratoga Springs, N.Y., office, just outside of Albany, Bela Musits is pondering how he can transform upstate New York’s Tech Valley to a region as rich and fertile for entrepreneurs as California’s Silicon Valley.
He’s got his work cut out for him. Only three Albany-area companies have reported raising rounds of venture capital so far this year, accounting for $3.95 million in new investment, according to Thomson Venture Economics (publisher of PE Week).
But Musits has a plan. As managing director of High Peaks Venture Partners, a six-month old firm charged with investing in upstate New York’s budding technology companies, Musits will invest in early and seed-stage companies. High Peaks will target anything from software to biotech, nanotechnology or materials.
The fund, High Peaks Ventures, is part of a larger effort by New York’s state government to build a technology infrastructure and create jobs in the region.
“For far too long, Upstate New York has been underserved by venture capitalists and has missed out on the establishment and expansion of new jobs and new high-tech business opportunities,” says New York State Comptroller Alan Hevesi.
Not any longer.
The New York State Common Retirement Fund, for which Hevesi is the sole trustee, last week made a $30 million commitment to High Peaks. Musits expects to close the firm’s inaugural fund with $50 million by early next year. So far the fund has $42 million in its coffers.
Other limited partners in the High Peaks fund include KeyBank N.A., Hudson River Bank & Trust Co., Adirondack Trust Co. and the State University at Albany.
“Investing in this fund is just one more way to use our financial resources to further protect and enhance the future of the upstate economy,” Hevesi says.
In 1999, the Empire State created an investment program to direct more of the state pension fund’s investments to New York companies. New York’s State Senate then created a jobs initiative in 2000 to fund job-training programs and encourage the growth of technology businesses.
As a result, more than $1 billion has poured into New York’s Capital Region over the last couple of years to build a technology infrastructure.
“New York has started nanotechnology and energy industry clusters, adding to the investment from the private sector and the local universities,” Musits says. “The state is really investing in research, and we’re planning to pick up some of that and make good companies.”
High Peaks has not yet made an investment. When it does, it will invest up to $2 million in each portfolio company.
Musits, the former director of the technology incubator at Troy, N.Y.-based Rensselaer Polytechnic Institute, will manage the fund alongside Russell Howard and Brad Svrluga, two former managing directors with The Berkshires Capital Investors in Williamstown, Mass.
High Peaks will also have the support of Williamstown, Mass.-based Village Ventures Inc., a network of regional venture capital funds.
High Peaks is a member of the Village Venture network of funds. Founded in 2000, Village Ventures provides back office services for its affiliates and co-invests in its affiliates’ portfolio companies.
Matthew Sheahan contributed to this story.