Milestone Ventures, LLC

What is the purpose of a seed capital fund?

A seed capital fund is a type of venture capital fund.  As opposed to most venture capital funds, a seed fund invests in start-up or early stage companies.  Most venture funds invest in companies that have reached at least $1 million in sales.  Conventional forms of financing (i.e. banks) are typically not available for the types of businesses targeted by a seed fund, there is just too much risk.

What type of investment does the fund look for?

The primary focus is technology based businesses.  This would include new products, new processes, improvements to existing products/processes and even some services.  While the fund focuses on new technologies it is also open to more traditional types of businesses, as long as they meet the fund's investment criteria.

What is the fund's investment criteria?

The fund makes its investment decisions based on the following criteria:
· Quality of the entrepreneur and management team
· Uniqueness of the product
· Size of the market or a distinct competitive advantage
· Can reach sales of at least $5 million in 5-7 years
· Can produce a return of 3-5 times the seed fund investment within 5-7 years
· An entrepreneur who is fully committed and willing to work with the fund manager

What's in it for the entrepreneur, the fund?

The primary advantage to the entrepreneur is access to equity capital versus debt capital.  This allows the business to leverage other forms of financing.  Another advantage is the expertise of the fund manager, which plays a very important role of insuring that the business succeeds and the fund's investment is used wisely.  The fund expects a return on its investment.  When the fund makes an investment, an ownership position is taken in that company.  The fund attempts to achieve a return of 3-5 times its investment.

Elements of a Venture Proposal

Purpose and Objectives - a summary of the what and why of the project.

Proposed Financing - the amount of money you'll need from the beginning to the maturity of the project proposed, how the proceeds will be used, how you plan to structure the financing, and why the amount designated is required.

Marketing - a description of the market segment you've got or plan to get, the competition, the characteristics of the market, and your plans (with costs) for getting or holding the market segment you're aiming at.

History of the Firm (if any) - a summary of significant financial and organizational milestones, description of employee relations, explanations of banking relationships, recounting of major services or products your firm has offered during its existence or plans to in the future.

Description of the Product or Service - a full description of the product (process) or service offered by the firm and the costs associated with it in detail.

Financial Statements - historical (if available) for the past few years and projected for the next 3-5 years.

Capitalization - a list of shareholders, how much is invested to date, and in what form (equity/debt).

Resumes - of officers and key personnel

Principal Suppliers and Customers - including letters of intent if possible

Problems Anticipated and Other Pertinent Information - a candid discussion of any contingent liabilities, pending litigation, tax or patent difficulties, and any other contingencies that might affect the project.

Advantages - a discussion of what's unique about your product, service, marketing plans or channels that gives your project a competitive advantage.

History of Milestone Ventures, LLC

Milestone Ventures, LLC was established in November 1998.  It operates as a limited liability company.  The initial two investors or members of the fund were the City of Pittsburg, through economic development revolving loan fund, and the Kansas Technology Enterprise Corporation (KTEC).  These two parties came together, along with the support of Pittsburg State University to establish the seed capital fund.  The fund is also open to individuals and other organizations that are interested in investing in the fund.

The fund is a component of the Alliance for Technology Commercialization, Inc. (ATC) and is managed by a wholly owned subsidiary, Milestone Management, Inc.  For more information contact ATC President, Eric Ferrell at (620) 235-4927 or send an email to eferrell@pittstate.edu.