Granite Fund makes grants to 3 firmsBy DAVE SOLOMON
New Hampshire Union Leader
April 24. 2013 11:53PM
CONCORD - A venture capital fund created solely to support high-tech companies in New Hampshire announced its first round of investments on Wednesday at a well-attended event in the executive chambers of the State House.
Gov. Maggie Hassan was on hand, along with a host of state officials, investors and representatives of the first three companies financed by the Granite Fund - a biotech start-up, an online photo management service and a high-profile Manchester tech company.
Jesse Devitte, managing director and co-founder of Borealis Ventures, introduced the three companies, noting that each was in a different phase of their evolution, with one just starting, another well on its way and the third well-established. Borealis, the state's best-known venture capital firm, has partnered with the state Business Finance Authority (FBA) to administer the program.
"What's special today about the first three investments is that they really represent the range of opportunity for the fund and the range of need in the state," he said.
Avitide, the newest of the three companies, is developing customized biotech purification processes from its headquarters in Lebanon.
Mosaic Storage Systems, based on Elm Street in Manchester, has developed an image management solution for serious photographers.
Dyn, the third company funded, is a well-known name in the Manchester area, with technology that drives performance of email systems, websites and applications around the world.
"This first group of companies represents the range of investments that are the basis for the fund going forward," said Devitte, "including a start-up in Avitide, a follow-on investment round in Mosaic which has been a seed-funded company to date, and then an investment in Dyn, which is New Hampshire's premier growth tech company."
The Granite Fund was initially conceived as a way to raise start-up money to fuel innovation in a state where investment resources are limited, Devitte said.
The fund also provides a lower-risk vehicle for the state's institutional investors to promote the New Hampshire economy and local job growth.
The fund was launched last year with $4.5 million in grant money from the U.S. Treasury Department's Small Business Credit Initiative, administered by the BFA. Other investors include Borealis, Elliot Hospital, the New Hampshire Charitable Foundation and the state Endowment for Health.
The fund is well more than half way toward its goal of generating $30 million to invest in New Hampshire high-tech companies, according to Jack Donovan, executive director of the BFA.
He emphasized that all investment decisions are made by Borealis, and that no state agency is involved. "It's all privately run," he said.
The BFA money will be the first to be expended, but the BFA will be the last investor to recoup any returns, in a "first-in, last-out" approach that has been effective in attracting private money. The BFA is essentially providing a first-loss guarantee to protect a portion of the principal invested by the fund's other contributors.
"We believe there will be a very good investment return on this capital," said Marshall Rowe, treasurer and chairman of the Endowment for Health Finance Committee.
Representatives from Avitide and Dyn declined to reveal the amount of money they received from the Granite Fund, and Donovan said that was their option. Gerard Murphy of Mosaic said the company's recent filing with the Securities and Exchange Commission reports an investment of $875,000, "a significant chunk" of which came from the Granite Fund.
In a March 15 filing with the SEC, Avitide reported an initial stock transaction of $1.4 million offered and sold on the same date as an equity offering.
Dyn has had no trouble attracting investors, with several big names making a $38 million investment in late 2012.
"The work of these entrepreneurs will undoubtedly lead to jobs, innovation and prosperity that we can't yet even imagine," Hassan said.