March 11, 2009 0:00 AM - IVCA
CHICAGO – IllinoisVENTURES is a seed- and early stage technology
investment firm focused on research-driven companies in information
technologies, the physical sciences, life sciences and clean technology.
Managing director and CEO John Banta has a wealth of experience in clean technologies, which are currently among the hottest investments for venture capitalists. The IVCA recently interviewed Banta to discuss IllinoisVENTURES, the current climate for green tech investments and the research that creates new enterprises.
IVCA: How did IllinoisVENTURES establish and distinguish itself as a seed- and early stage technology investment firm?
John Banta: We were born out of a conviction that competitive return can be achieved through investment in a portfolio domiciled in large part in Illinois and the Midwest. The impetus was a willingness on the part of the University of Illinois to attack a challenge in a creative and commercially powerful way.
We’ve developed a particular expertise in research-derived work and have developed a portfolio of industry-leading holdings in highly fundable domains. In the process, I think we’ve crafted a uniquely capital-efficient approach that has served us well in both good (and now with the rather bad) environments.
IVCA: The root of your company is in academia. What bridges the need between those academic roots and the venture capital community?
JB: Like any early stage venture investor, a significant aspect of our effort involves fostering successful co-investor relationships with leading firms that are active in our areas of technical endeavor.
Where we’ve excelled is in developing deep expertise in specific domains. When combined with our highly active approach, this allows us to act as “feet on the ground” for investors that may not have staff on the ground in the Midwest.
IVCA: In your development work with Midwest universities and federal laboratories, what type of research are you finding to be most attractive for investors?
JB: There are not a lot of new rules. As investors, we look for projects that start with a defensible advantage to allow sustained margins against scalable markets.
The trick when doing research-derived work is to focus on technology that can be made into a product in commercially relevant form and validated with real customers in a reasonable time frame. This is a requirement to achieve a competitive return. That approach tends to ring well with peers and has helped us facilitate the development of co-investor syndicates.
IVCA: Green tech has excited the investor community. What does IllinoisVENTURES focus on within the green tech realm that garners the most interest in the venture capital community?
JB: Beneath the trendy “green tech” and “clean tech” monikers are long-standing areas of work for us: industrial bioprocessing, advanced materials, device physics, etc. These happen to translate productively into applications like renewable biochemicals, water sensing, remediation and lighting.
That the venture spend has expanded so significantly in these areas is terrific, but as always, it’s critical to have a perspective on where the “puck is going to be” as it relates to current commitments while avoiding areas at risk of having become overfunded.
IVCA: How will the Barack Obama administration, which is committed to more science-friendly policies, help to expand the type of technologies IllinoisVENTURES is committed to?
JB: It’s clear that renewable energy research will continue to grow in key areas and that NIH funding will remain fairly stable. This bodes well for the continued flow of future fundable projects. Having said that, innovation would always occur even in tough environments as evidenced by Silicon Valley’s leading companies (many of which have roots in the malaise of the 1970s).
IVCA: Information technologies are a constantly evolving dynamic. What trends or areas of IT will garner the most interest in 2009 and beyond?
JB: Data. Data. Data. Over the last 10 years, the Internet went through several phases. The first phase was about commercialization and creating companies like Amazon and eBay. The second phase was about socialization through blogging, tweeting, Facebook, etc.
The next phase will be about helping make sense of all the data that is being created on the Internet through better understanding context, keywords and classification. Also, opportunities have emerged as information technology has met the power grid and has created the smart grid.
New challenges exist around monitoring, securing and protecting all the data.
IVCA: What advantages does IllinoisVENTURES have as a Midwest-based venture capital firm?
JB: We benefit from three factors. First, there were a limited number of truly early stage investors focused on research-derived investing in the Midwest. We are now among the most active.
Second, we’ve been fortunate to develop expertise in industries and technical domains that have emerged as highly fundable. This is a reflection of the nature of the vast high-quality research base in the Midwest and ashift in the venture spend. Finally, at the heart of all our projects are people. The human capital markets in many of our areas of focus are actually pretty rich in the Midwest.
Managing director and CEO John Banta has a wealth of experience in clean technologies, which are currently among the hottest investments for venture capitalists. The IVCA recently interviewed Banta to discuss IllinoisVENTURES, the current climate for green tech investments and the research that creates new enterprises.
IVCA: How did IllinoisVENTURES establish and distinguish itself as a seed- and early stage technology investment firm?
John Banta: We were born out of a conviction that competitive return can be achieved through investment in a portfolio domiciled in large part in Illinois and the Midwest. The impetus was a willingness on the part of the University of Illinois to attack a challenge in a creative and commercially powerful way.
We’ve developed a particular expertise in research-derived work and have developed a portfolio of industry-leading holdings in highly fundable domains. In the process, I think we’ve crafted a uniquely capital-efficient approach that has served us well in both good (and now with the rather bad) environments.
IVCA: The root of your company is in academia. What bridges the need between those academic roots and the venture capital community?
JB: Like any early stage venture investor, a significant aspect of our effort involves fostering successful co-investor relationships with leading firms that are active in our areas of technical endeavor.
Where we’ve excelled is in developing deep expertise in specific domains. When combined with our highly active approach, this allows us to act as “feet on the ground” for investors that may not have staff on the ground in the Midwest.
IVCA: In your development work with Midwest universities and federal laboratories, what type of research are you finding to be most attractive for investors?
JB: There are not a lot of new rules. As investors, we look for projects that start with a defensible advantage to allow sustained margins against scalable markets.
The trick when doing research-derived work is to focus on technology that can be made into a product in commercially relevant form and validated with real customers in a reasonable time frame. This is a requirement to achieve a competitive return. That approach tends to ring well with peers and has helped us facilitate the development of co-investor syndicates.
IVCA: Green tech has excited the investor community. What does IllinoisVENTURES focus on within the green tech realm that garners the most interest in the venture capital community?
JB: Beneath the trendy “green tech” and “clean tech” monikers are long-standing areas of work for us: industrial bioprocessing, advanced materials, device physics, etc. These happen to translate productively into applications like renewable biochemicals, water sensing, remediation and lighting.
That the venture spend has expanded so significantly in these areas is terrific, but as always, it’s critical to have a perspective on where the “puck is going to be” as it relates to current commitments while avoiding areas at risk of having become overfunded.
IVCA: How will the Barack Obama administration, which is committed to more science-friendly policies, help to expand the type of technologies IllinoisVENTURES is committed to?
JB: It’s clear that renewable energy research will continue to grow in key areas and that NIH funding will remain fairly stable. This bodes well for the continued flow of future fundable projects. Having said that, innovation would always occur even in tough environments as evidenced by Silicon Valley’s leading companies (many of which have roots in the malaise of the 1970s).
IVCA: Information technologies are a constantly evolving dynamic. What trends or areas of IT will garner the most interest in 2009 and beyond?
JB: Data. Data. Data. Over the last 10 years, the Internet went through several phases. The first phase was about commercialization and creating companies like Amazon and eBay. The second phase was about socialization through blogging, tweeting, Facebook, etc.
The next phase will be about helping make sense of all the data that is being created on the Internet through better understanding context, keywords and classification. Also, opportunities have emerged as information technology has met the power grid and has created the smart grid.
New challenges exist around monitoring, securing and protecting all the data.
IVCA: What advantages does IllinoisVENTURES have as a Midwest-based venture capital firm?
JB: We benefit from three factors. First, there were a limited number of truly early stage investors focused on research-derived investing in the Midwest. We are now among the most active.
Second, we’ve been fortunate to develop expertise in industries and technical domains that have emerged as highly fundable. This is a reflection of the nature of the vast high-quality research base in the Midwest and ashift in the venture spend. Finally, at the heart of all our projects are people. The human capital markets in many of our areas of focus are actually pretty rich in the Midwest.
Illinois Venture Capital Association
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