Venture capital is often an important key to getting a new business off the ground. With that in mind, the North Dakota Legislature recently passed two bills to make start-up dollars more readily available.

Senate Bill 2335 provides $5 million from the state employee pension fund to assist start-up firms that focus on commercializing ideas from the state's two research universities. Under the bill, the pension fund is protected from loss by backing the investments with the student loan trust fund.

In addition, Senate Bill 2259 expands the 1999 Renaissance Venture Fund Bill to allow for investment in any communities with Renaissance Zones. Previously, the venture capital was limited exclusively to businesses within the 20-block Renaissance Zones themselves.

The legislation is expected to provide a helping hand for new businesses.

"North Dakota is working hard to provide private equity financing for research-stage and early-stage companies, especially those trying to commercialize university-developed technology," explained John Cosgriff, manager of InvestAmerica, Fargo. "Those companies often do not have traditional bank lending capabilities. Equity financing can be the springboard for their development."

Cosgriff said small companies can expend their own limited resources bringing a product to market, and another financing mechanism is necessary. "The legislature has done a great thing for North Dakota," he said. "One of the most difficult venture capital financing is research and development at a very early stage. It's a high, high risk proposition and that type of capital provides opportunities."

Tony Grindberg, executive director of the NDSU Research and Technology Park, describes the situation this way. "For successful start-ups, you need the tools," he said. "You need marketing and business planning assistance, access to support staff and information technology and access to venture capital. This legislation helps entrepreneurship."

Grindberg notes that the bills also fit the model proposed by Sen. Byron Dorgan for a North Dakota research corridor, a collaboration of expertise and planning between NDSU and the University of North Dakota.

And that kind of thinking is something that Brent Teiken, founder and president of SunDog Interactive, now Correlat Inc., of Fargo, can appreciate. He said having more venture capital should attract more start-up businesses, citing the example of how high tech companies located near InTel to form the famous Silicon Valley.

"It's important to grow the state. It's also important for high tech companies like SunDog to surround themselves with other high tech companies," Teiken said. "Companies in the high tech industry will start to look at North Dakota, which is evidenced by the recent announcement that Alien Technology is moving to the state. If we can bring in more companies, potential customers will think of North Dakota as a high tech state, which is a good thing for business here."

NDSU President Joseph A. Chapman says North Dakota is well positioned for economic expansion. "We provide an outstanding education to highly-motivated students, we have the Research and Technology Park as an accommodating venue, and we have elected leadership committed to the task."

According to Grindberg, both pieces of legislation have a potentially positive impact on the NDSU Research and Technology Park. "In SB 2335, the legislative intent was to help fund ideas coming out of the research universities and spur economic growth," he said. "SB 2259 allows for the establishment of a venture fund to invest in a project in the park, if an opportunity presents itself."

To build for that possibility, additional infrastructure will be put in place at the park during the next 18-24 months. "That includes an incubator building, and the systems, staffing and services for small business entrepreneurs," Grindberg said. "We also want to enhance the environment and culture within the university to improve business start-ups."

Developments like those are exactly what Teiken says is needed for North Dakota.

"If you have the infrastructure, venture capital and the people available, that is the three legs of the stool," Teiken said. "From a research and tech standpoint, we are on the right path. We do have all three of those components now."