Private Equity Fund Proposed To Aid MN Startups
In an effort to revive investments in small businesses, locally based venture capitalists and fund managers are reportedly urging Governor Mark Dayton to adopt an equity fund that would be privately financed and operated by large foundations and financial institutions.
According to the Star Tribune, the suggestion is in light of year-over-year declines in venture funding to local startup businesses and is a follow-up to a 2011 task force report that was sent to Dayton.
Following the 2011 report, Dayton deposited approximately $200 million in state funds into community bank accounts in an effort to stimulate local business expansion, according to the Minneapolis newspaper.
However, local venture capitalists and fund managers have recently suggested more must be done to create growth in the local economy. According to the Star Tribune, one way would be to have foundations and banking institutions such as U.S. Bancorp, Thrivent Financial, and Ameriprise Financial, all of which are based in Minneapolis; pledge several million dollars each, which would in turn provide early-stage businesses with necessary capital.
According to the Minneapolis newspaper, Leslie Frecon, CEO of Minneapolis-based private investment firm LFE Capital, LLC, is one individual behind the private equity fund request. LFE Capital’s portfolio has a history of investments in growing companies as well as strong investor returns.
Kathy Tunheim, owner and CEO of Bloomington-based Tunheim Partners and also a volunteer adviser to Dayton, told the Star Tribune that she’s “thrilled to death on behalf of the governor to have Leslie and the others looking at this.” Tunheim added that an investment plan is necessary for future small business growth.
“We’ve done some things, but the small business people say there’s still too little capital, and the banks are saying they have to do only ‘bankable deals.’ We’d better figure out what to do or we’ll be behind the 8-ball,” she told the newspaper.
While local venture capitalists and fund managers have discussed the issue for months, Dayton’s endorsement and contact with the state’s large financial institutions would be the necessary push to put a plan into action, the Star Tribune said.
Tunheim told the newspaper that she expects the Dayton administration will meet with interested parties and announce an initiative within 90 days.
In April, Twin Cities Business investigated startup business needs and asked small business advisors to offer their advice. Click here to read the full story.