Portland-based Elevate Capital has been selected to manage the second state fund designed to invest in early stage, science-based startups.
Called the Commercialization Gap Fund 2, it’s a $4.5 million fund from the state’s economic development arm Business Oregon. Elevate also managed the first Gap Fund, which was created by the state in 2020.
Startups eligible for funding must be based in Oregon or plan to grow in the state. Many are based on technology developed at or with the state’s universities and research centers.
These companies are typically capital-intensive requiring prototypes and other development for commercializing. This intensity can make finding angel and early-stage investment difficult, especially if investors can put money into a software startup and see a return on much shorter timelines. This leads to a gap in funding for science and research-based startups.
That is where this state funding comes in.
Gap Fund 2 is about double the size of the first fund, said Ben Nahir, venture principal at Elevate Capital. With the bigger fund size the group can write bigger checks and lead funding rounds for companies.
Fund 1 wrote checks between $50,000 and $250,000. Now it plans to write checks between $100,000 and $250,000. Targeted industries are life sciences, cleantech and sustainability, advanced manufacturing and active lifestyle. The team expects to invest in another 15 companies.
Elevate also invests from its own fund and its team is active in the TiE Oregon community, another entrepreneurial resource and investor in town. Companies that receive Gap funding also get tied into those communities.
“Elevate Capital, through its work with the Gap Fund, exposed a dire need for capital for Oregon’s early-stage companies coming out of its research institutions,” said Nitin Rai, founder and managing partner at Elevate Capital. “As the manager of the Gap Fund, Elevate Capital provides not only capital, but mentorship and business guidance as well — we help companies achieve key technical and business development milestones.”
Elevate invested in 15 companies over 12 months for Fund 1. Those companies went on to raise another $4.5 million in outside investment and more than $7.5 million in non-dilutive grants, according to Elevate. Of those companies 29% were led by women and another 29% were led by immigrants or Black, Indigenous or people of color founders.
“It is incredibly exciting to partner with Elevate Capital to manage our private equity program, the Commercialization Gap Fund,” said Kate Sinner, innovations and entrepreneurship manager at Business Oregon in a written statement. “This program enables the state to financially support early-stage science and research-based companies and benefit from their success. We fully intend for this program to prove to be an evergreen program that will support countless companies and fill existing capital gaps.”
Rai said the fund is already seeing more activity around cleantech and sustainability. Both Rai and Nahir noted that larger institutional investors have become more active investing in cleantech which means early stage companies can see a path to later stage investing and that ramps up the pipeline.
Fund 2’s investment period lasts through the middle of next year. Elevate has already completed its first investment out of the fund. It led a round for St. Johns-based Canopii, a startup working in agriculture automation and energy management.
“Our first cohort of companies have done incredibly well in the last 18 months, with several raising funds from other investors,” said Nahir in a written statement “The additional capital provided by Business Oregon for Gap Fund 2 will significantly enhance our ability to make meaningful investments to support our next generation of founders.”
