To help VCs take plunge, maybe we need a dive

August 1, 2005

BY MICHAEL KRAUSS

Could more drinking establishments benefit Chicago's economy? One prominent local venture capitalist thinks Chicago could use at least one more, provided it catered exclusively to venture capitalists and entrepreneurs.

Consider that according to the Illinois Venture Capital Association, Illinois tallied a paltry 12 venture capital deals with $56 million invested in the second quarter.

California recorded 307 deals with $2.8 billion invested.

Fewer deals today means fewer job-emanating companies tomorrow.

"We need to create a watering hole culture," says Bret Maxwell, managing general partner of Northbrook-based MK Partners.

Maxwell is speaking metaphorically. While the concept conjures up images of financiers rolling in the gutter like winos, that's not the point. Maxwell thinks too few mid-level Chicago executives leave established corporations to start companies. There's just no natural gathering place for VC's and entrepreneurs to mingle.

Don't blame Maxwell if insufficient venture deals get done in Chicago. Maxwell is a seasoned VC with a strong track record. His firm just completed raising a $150 million fund. He and partner Mark Koulogeorge specialize in backing applied technology and outsourced services firms.

Last week they added former SAIC Executive Vice President Neil Cox as a partner. Cox is an expert in next-generation telephone and wireless technologies.

Maxwell has a good reputation. Says University of Chicago entrepreneurship Professor Steve Kaplan, "Bret is outstanding because he is very careful and disciplined as well as honest and direct with entrepreneurs."

Maxwell and his colleagues have collectively managed 10 venture funds over the past 20 years investing over $750 million in 200 companies. Their investments led to 15 IPOs.

Maxwell backs executives who test the entrepreneurial waters. Robert Hoyler, former Keebler Co. SVP, recently finished a successful deal with Maxwell. Hoyler was CEO of Magnify, a predictive analytics software company Maxwell backed. The firm was recently sold to Georgia-based ChoicePoint, an insurance industry information provider. Now Hoyler's scouting his next deal.

Says Hoyler, "Maxwell is exceptionally demanding. Yet he's willing to listen to all sides. He gets the best out of people."

With credentials like that, maybe Maxwell can get a leading restaurateur like Rich Melman, Phil Stefani or Larry Levy to open The VC Grill. Make it a local watering hole for venture capitalists and entrepreneurs.

It would be good for business. I'll even buy the first round.

We're No. 1

Business Facilities magazine ranks Illinois No. 1 in the nation for biotechnology in the July issue. The magazine's readers are corporate real estate executives -- the people who make location decisions for new facilities.

"When people read this magazine and see what is happening in Illinois, it's going to lead to more investment," says Jack Lavin, director of the Illinois Department of Commerce and Economic Opportunity.

Last week Lavin and a host of dignitaries cut the ribbon on the new Illinois Science and Technology Park in Skokie. "The new tech park will create over 3,000 jobs on-site when the development is complete. It's going to lead to over 10,000 ripple-effect jobs, and 1,000 construction jobs," says Lavin. "It's a great shot in the arm."

In town for the ribbon cutting was Gayle Farris, president of Forest City Science + Technology Group, developer of the Skokie facility. Farris is one of the most experienced technology facilities developers in the country.

South Side biotech park?

There a huge gap in the plan to transform Illinois into a biotech leader. When will the South Side get a biotech park?

With the Illinois Institute of Technology and the University of Chicago nearby, a South Side biotech park makes sense.

Last week's announcement that U. of C. president Don Randel is leaving to take the helm of the Mellon Foundation will further stall progress on a South Side facility.

IIT hosts VoIP confab

Technologies like Internet telephony are gaining popularity. But are they private and secure? That's the question IIT Professor Carol Davids explores when she hosts her VoIP/Wireless Security Conference today and Tuesday at the South Side campus.

"This is a fast deploying technology," Davids says.

Michael Krauss is a Chicago-area tech writer and consultant.

 

 

 ©2005 Marion Consulting Partners