|
Center of North America Capital Fund Approaches Lift-Off
6/6/2003
|
The National Governor Association’s Center for Best Practices recently highlighted the promotion of entrepreneurship as one of three critical strategies for encouraging rural economic dynamism. The report concludes that important ingredients in promoting entrepreneurship include access to seed capital; developing local capacity to identify, encourage, and train entrepreneurs; and using online networks and other technology to connect entrepreneurs with critical information and resources.
The Center of North America Capita Fund was launched in the summer of 2000 to provide investment capital to early-stage and expansion-stage companies in North Dakota, particularly those located in the REAP Zones. The Fund’s “double bottom line” mission is to provide capital for companies with exciting ideas and high potential and also to facilitate the growth and development of companies that will create quality jobs in their communities.
The Fund looks for companies that have a viable market opportunity, a quality management team and an execution plan leading to successful realization of revenue potential in their competitive marketplace. The most common investments used by the CONAC Fund are common or preferred stock and subordinated debt with conversion privileges or warrants. The price, ownership and exit that the CONAC Fund negotiates are based on both the anticipated return potential and the perceived risk associated with that investment. A typical investment in a portfolio company ranges from $10,000 to $50,000.
Since its debut the Fund has conducted full due diligence on about twenty deals and made offers to eight companies. By the end of this summer the Fund anticipates that it will have finalized investments in at least 4 companies. Don Frye, Chairman of the Fund recently summarized the sentiments of the Fund’s member investors, saying that he “was very encouraged by the Fund’s recent deal flow and the board’s functioning as an investment fund but disappointed by the past level of interest among other investors within the State.” The Fund’s current investors include the REAP Investment Board, Northern Plains Electric, the United Community Bank of North Dakota, the OtterTail Company, the Bottineau County EDC, the Rolla JDA, the Rugby JDA, the Griggs-Steele Empowerment Zone, and CEO Praxis, Inc.
Delore Zimmerman of CEO Praxis, Inc., the managing member of the Fund, points to the Fund’s steady deal flow and recent interest among new investors as signs that the Fund is on the right track. “We always knew there that the need for seed capital was there but we anticipated that we would hit full-stride much sooner. Now there seems to be a greater awareness of the need for seed capital to grow our economy and a heightened recognition that we’re going to have to do it ourselves if something’s going to happen.”
For deals looking for capital, the Fund invites prospective companies to make a 15 to 20 minute presentation to the board. After this presentation the Fund decides whether or not to go ahead with a full due diligence workup on the opportunity. Companies that have received approval for a full due diligence workup work with CEO Praxis, Inc. to complete the work necessary for the Fund to understand your company, its market potential and its valuation. Often, a second presentation to the Fund is recommended to complement the due diligence workup. At that point the Fund may make an offer to the company; if that offer is agreed to by the company a purchase agreement is drafted.
|
| |
|
| For
More Info, Contact: |
Delore Zimmerman |
| |
(701) 775-3354 |
| |
delore@ceopraxis.com |
|
|
