innovate arkansas

The Arkansas Development Finance Authority announced Monday that the Arkansas Institutional Fund has committed $5 million to the sixth fund of Atlanta-based venture capital fund manager Noro-Moseley Partners.

The AIF is managed by Cimarron Capital Partners, a national investment management firm specializing in regional private equity and the designated investor group for the fund.

"Noro-Moseley has been visible here and will do a stellar job for us," said Gene Eagle, ADFA vice president. "Their investment experience in the Southeast brings added know-how to our great state."

Founded in 1983, Noro-Moseley is one of the largest venture capital firms in the southeastern United States. Since its inception, Noro-Moseley has created five limited partnership funds totaling approximately $580 million and has invested in approximately 160 companies.

"Noro-Moseley has convinced us they can open new markets like Arkansas," said Michael Tharp, Cimarron managing director. "They believe they can enhance returns for their partners by prospecting in Arkansas."

Noro-Moseley's sixth fund, which closed Monday, is capitalized at $120 million and will invest in 20-25 companies in the technology, healthcare and tech-enabled business services industries.

"Arkansas is a natural fit with our regional strategy of providing management teams with an extensive contact network to build great companies," said Kathy Harris, Noro-Moseley Partner. "We are excited about the opportunity to invest in Arkansas' promising entrepreneurs and bring additional venture capital to the state."

Eagle said Noro-Moseley, a newcomer to Arkansas, specifically focuses on software communications, infrastructure, security and logistics technologies. Within healthcare, the firm's areas of expertise are in information technology and devices. Tech-enabled business services include business process outsourcing, financial services and technologies.

In an effort to strengthen the venture capital network in Arkansas and promote economic growth within the state, the AIF is authorized to invest in professionally managed venture capital funds that in turn make risk capital more accessible to Arkansas firms.

Legislation for the fund of funds program was adopted in 2003, and the first fund investment closed in 2003.

"Noro-Moseley is one of six funds that we've closed and invested with," Eagle said. "We've committed to right at $31 million so far."

Others include Fund for Arkansas' Future, Prolog Ventures, MB Venture Partners, SSM Partners and Meritus Ventures. Eagle said those firms have invested about $5 million in eight Arkansas businesses.

"The state of Arkansas authorized ADFA to utilize up to $60 million in transferable, state of Arkansas income tax credits," Eagle said. "We're using those credits along with ADFA's [$10 million] guaranty to basically raise capital from the bank."

Bank of America is the lender for the fund.

"We're borrowing money to make these investments, and we're making our bet on the fact that we're finding the funds who have the best track records, who have the interest in being here and being active here," Eagle said.

Arkansas has historically been underserved when it comes to venture capital investments. Eagle noted that this is just one aspect of a statewide effort to change that, such as the push toward a knowledge-based economy by groups such as Accelerate Arkansas and Innovate Arkansas.

"We're trying to put the infrastructure in place so that we can grow that," Eagle said. "This is just one piece of the financing needs we have in the state."