The Missouri Technology Corp. says it has achieved a key milestone, having now awarded more than $50 million to early-stage companies through its state-sponsored venture capital program.
MTC, a public-private partnership, announced the milestone this week, saying it has provided $50 million in equity investments to about 160 companies through its Idea Fund. The $50 million figure comes after MTC in the past two years has rapidly expanded its investment pace, thanks to an influx of $95 million in federal funds.
Created by the Missouri General Assembly, MTC promotes entrepreneurship and provides investment to startups and entrepreneur support organizations.
MTC Executive Director Jack Scatizzi said MTC’s $50 million in investments speaks to the “longevity of a rather unique program to the Midwest” that’s focused on driving economic development gains in Missouri around technology and innovation. MTC touts that its investments have gone to companies that have created 8,000 Missouri jobs and garnered $2.1 billion from private investors. It says 22 of its portfolio companies have exited through merger and acquisition deals or public offerings. The organization says about 60% of companies it provided with funding remain in business.
MTC has been an early-stage investor in several high-profile St. Louis-area technology firms, including agriculture technology firm Benson Hill (NYSE: BHIL), a publicly traded company through a September 2021 merger with a special purpose acquisition company; Geneoscopy, which has raised more than $100 million in financing to develop a colon cancer test; and medical technology company MediBeacon Inc., whose largest shareholder is Pansend Life Sciences LLC, a subsidiary of New York-based Innovate Corp. (NYSE: VATE).
Scatizzi said MTC’s focus on economic development allows it to operate differently than traditional startup investors, including venture capital firms and angel investors.
“We’re in a unique position that we’re able to look at economic development wins and not have to look solely at returns,” he said.
That’s why Scatizzi says there are wins from MTC investments in companies, such as St. Louis-based Arch Oncology and Adarza Biosystems, that shut down. He said those firms, despite their operational failures, still created jobs and brought outside investment to Missouri, while also citing that former employees of those firms ended up in new roles at other local startups.
While MTC is not as focused on financial returns as traditional investors, Scatizzi said it does aim to have a one-to-one return for every dollar it allocates for investment. He said MTC is currently “just above” that one-to-one return rate, based on capital returns from exits and the value of its active portfolio.
MTC’s Idea Fund investments have largely been driven by federal funding received over the years by MTC. the organization said half its $50 million in investments were made through funds from the initial iteration of the U.S. Treasury Department’s State Small Business Credit Initiative, which launched in 2010. Federal legislation in 2021 created a second iteration of the SSBCI program, with MTC being allocated $95 million through the program. MTC said it has awarded about $12 million to more than 40 startups since the start of 2023, thanks to the fresh SSBCI funding. The SSBCI funding has allowed MTC to begin awarding investments quarterly. It had done one funding application cycle annually prior to the new SSBCI funding. MTC said that with the SSBCI fund it expects to continue awarding quarterly investments for the next six to eight years.
The SSBCI funding has allowed MTC to bolster back up its Idea Fund portfolio after it “slowed to a trickle of investments” after grappling with state budget cuts, Scatizzi said. MTC saw its funding drop 90% from about $24 million in fiscal 2017 to $2.5 million in fiscal 2018. Though, MTC has been given a funding boost in recent years, with the Missouri General Assembly allocating MTC about $15 million in Missouri’s fiscal 2024 budget. Scatizzi said the lowered funding meant MTC wasn’t able to invest in some deals, leading to a question of “what could the ecosystem look like, what could MTC’s portfolio look like if the state had been investing money” in the years when it had a lower annual budget.
