Texas Emerging Technology Fund
Encyclopedia
The Texas Emerging Technology Fund (often abbreviated as TETF or ETF) is a technology investment fund created by legislation in 2005 at the urging of Governor Rick Perry
to provide Texas with an unparalleled advantage in the research, development, and commercialization
of emerging technologies
. The enabling legislation (Texas HB1188 of the 79th Legislature) launched the ETF with $200 million to help create jobs and develop the economy of Texas
. Legislative revisions during the 2007 and 2009 sessions have expanded the total funds under management to approximately $500 million.
As of October 2010, the program has given a total of $173 million to 120 companies as well as $161 million to educational institutions.
ETF's first investments were executed in May 2006. By October 1, 2009, the ETF was the single largest pre-seed investor for emerging technology companies in the entire United States. As of June 6, 2011, the ETF had invested $196M in 132 commercialization investments. Approximately 1/2 of ETF's commercialization investments have been made within the biotechnology and life sciences industry.
Cardiospectra, Inc., an ETF portfolio company, was acquired by Volcano Corporation in December 2007 for $25M in cash with an additional $38M available upon the achievement of specific milestones. ETF's return on investment
on the Cardiospectra deal was 216% as of January 2011.
editorial board argued for fundamental reform in how the fund works. The board stated, "The way Texas doles out money... raises such serious questions about the role of political donations in the fund's operation that the governor and the Texas Legislature should revamp it." Although the board considered it "a valuable program", it remarked that "other states have tried to keep politicians at arm's length from the selection and funding process... Texas needs to do the same".
Columnist Timothy P. Carney has argued in the Washington Examiner
that the fund is "corporate welfare
"/"corporatism
". He labeled the $4.5 million grant to Convergen LifeSciences as "unsavory" since the company's CEO David Nance has donated $80,000 to Perry.
In response to criticisms, Governor Perry has said that it "is a pretty rare occurrence" for him to know that political supporters have connections to firms that receive funding.
Rick Perry
James Richard "Rick" Perry is the 47th and current Governor of Texas. A Republican, Perry was elected Lieutenant Governor of Texas in 1998 and assumed the governorship in December 2000 when then-governor George W. Bush resigned to become President of the United States. Perry was elected to full...
to provide Texas with an unparalleled advantage in the research, development, and commercialization
Commercialization
Commercialization is the process or cycle of introducing a new product or production method into the market. The actual launch of a new product is the final stage of new product development, and the one where the most money will have to be spent for advertising, sales promotion, and other marketing...
of emerging technologies
Emerging technologies
In the history of technology, emerging technologies are contemporary advances and innovation in various fields of technology. Various converging technologies have emerged in the technological convergence of different systems evolving towards similar goals...
. The enabling legislation (Texas HB1188 of the 79th Legislature) launched the ETF with $200 million to help create jobs and develop the economy of Texas
Economy of Texas
The economy of Texas is one of the largest and most rapidly growing economies in the United States. In 2011, Texas is home to six of the top 50 companies on the Fortune 500 list and 51 overall,...
. Legislative revisions during the 2007 and 2009 sessions have expanded the total funds under management to approximately $500 million.
As of October 2010, the program has given a total of $173 million to 120 companies as well as $161 million to educational institutions.
Investment Focus
The ETF focuses on three main investment areas:- Commercialization Investments: early-stage technology investment funds designed to assist companies in transforming ideas, concepts, and prototypes into commercial viable products.
- Research Matching Awards: funds create public-private partnerships which leverage the unique strengths of universities, federal government grant programs, and industry.
- Research Superiority Awards: funds for Texas higher education institutions to recruit the best research talent in the world.
ETF's first investments were executed in May 2006. By October 1, 2009, the ETF was the single largest pre-seed investor for emerging technology companies in the entire United States. As of June 6, 2011, the ETF had invested $196M in 132 commercialization investments. Approximately 1/2 of ETF's commercialization investments have been made within the biotechnology and life sciences industry.
Deal Sourcing
The ETF established seven Regional Centers of Innovation and Commercialization (RCICs) to foster technology commercialization throughout the entire state of Texas and act as an efficient deal sourcing mechanism. In addition, a statewide Life Science Regional Center of Innovation and Commercialization also was formed. The RCICs act as the regional agent to identify, evaluate, and submit promising proposals from their respective regions to the ETF Advisory Committee. The ETF Advisory Committee makes final decisions on awards. RCICs work closely with applicants in assisting with ETF proposal development, post-proposal debriefings, and commercialization activities. In addition, RCICs are a strong focal point to increasing cooperation and spurring collaboration between industrial, financial, and academic entities.Accolades
ETF estimates that portfolio companies and awardees have raised close to $1B in follow-on investment and private funding following ETF investment.Cardiospectra, Inc., an ETF portfolio company, was acquired by Volcano Corporation in December 2007 for $25M in cash with an additional $38M available upon the achievement of specific milestones. ETF's return on investment
Return on investment
Return on investment is one way of considering profits in relation to capital invested. Return on assets , return on net assets , return on capital and return on invested capital are similar measures with variations on how “investment” is defined.Marketing not only influences net profits but also...
on the Cardiospectra deal was 216% as of January 2011.
Fund Management
The ETF is housed within the Economic Development division of the Texas State Government. Jonathan Taylor currently serves as ETF Director. Prior ETF Directors include Mark Ellison and Alan Kirchhoff. You can visit the ETF website at: http://www.emergingtechfund.comDebates and commentary about funding
An October 2010 article by the Dallas Morning NewsThe Dallas Morning News
The Dallas Morning News is the major daily newspaper serving the Dallas, Texas area, with a circulation of 264,459 subscribers, the Audit Bureau of Circulations reported in September 2010...
editorial board argued for fundamental reform in how the fund works. The board stated, "The way Texas doles out money... raises such serious questions about the role of political donations in the fund's operation that the governor and the Texas Legislature should revamp it." Although the board considered it "a valuable program", it remarked that "other states have tried to keep politicians at arm's length from the selection and funding process... Texas needs to do the same".
Columnist Timothy P. Carney has argued in the Washington Examiner
Washington Examiner
The Washington Examiner is a free daily newspaper published in Springfield, Virginia, and distributed in the Washington, D.C. metropolitan area. It is owned by Denver billionaire Philip Anschutz....
that the fund is "corporate welfare
Corporate welfare
Corporate welfare is a pejorative term describing a government's bestowal of money grants, tax breaks, or other special favorable treatment on corporations or selected corporations. The term compares corporate subsidies and welfare payments to the poor, and implies that corporations are much less...
"/"corporatism
Corporatism
Corporatism, also known as corporativism, is a system of economic, political, or social organization that involves association of the people of society into corporate groups, such as agricultural, business, ethnic, labor, military, patronage, or scientific affiliations, on the basis of common...
". He labeled the $4.5 million grant to Convergen LifeSciences as "unsavory" since the company's CEO David Nance has donated $80,000 to Perry.
In response to criticisms, Governor Perry has said that it "is a pretty rare occurrence" for him to know that political supporters have connections to firms that receive funding.