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Innovate Mississippi has job of putting great ideas on a path to market

Tony Jeff

Tony Jeff

By TED CARTER

Every so often someone walks into the Innovate Mississippi office certain he has devised a surefire perpetual motion machine.

Tony Jeff will probably be the one hearing the claim.

The market indeed needs a machine that outputs more energy than it takes in. But what the Ridgeland office of Innovate Mississippi wants to see today is a great idea with a good chance of taking in a lot more dollars than it puts out, said Jeff, who joined the non-profit economic development agency in 2001 and took over as its CEO in 2010.

The great ideas are out there. You just have scour Mississippi to find them, he said.

“We work with more companies now than probably was originally envisioned,” he said. “We figure we need to throw a wide net.

» READ MORE: INNOVATING IN MISSISSIPPI — Entrepreneurs present their ideas to Innovate Mississippi’s Venture Capital Network at Spotlight event

“The system we have developed can cover 125 companies a year, maybe 150. We give them the tools to succeed and let the market decide which one will succeed.”

The best bet, Jeff said, is spotting a company’s potential at its conception stage and helping to gear the innovation to market demands rather than an inventor’s fancy. “We want to help them develop that part of the product that the market needs,” said Jeff, owner of undergraduate and graduate engineering degrees who previously worked spotting market opportunities for auto parts maker Delphi Automotive.

That the enterprise may carry risks is not a large concern to Innovate Mississippi. In fact, companies selected are expected to have risks, Jeff said.

The risks make the businesses unlikely candidates for a bank loan but a good candidate for a helping hand from Innovate Mississippi. “We don’t work well with restaurants, retail and real estate,” Jeff said. “Those are all bankable deals.”

A typical business assisted by Innovate Mississippi has a technology that may or may not work. Nor does it have any guarantee anyone will buy it, Jeff said.

An identifiable potential is the key, he said.

Innovate Mississippi has a network of angel investors and is able to draw from the Mississippi Seed Fund, a 2007 allocation from the Legislature that has about $1 million remaining. An Innovate Mississippi investment board reviews and selects companies for the seed funding.

“The seed fund is intended to be used along with a research grant or private investment,” he said.

Companies can get up to $100,000 if working with a university research grant and the same amount if matched by investors, according to Jeff.

The fund is replenished once companies assisted by Innovate Mississippi begin generating revenue, he said. “This is not a grant. It is an investment.”

In some instances, the company repays the seed funding and in others Innovate Mississippi converts the funding into ownership shares in the company.

The organization today has about $2.4 million invested in companies backed by angel investors, Jeff said.

Innovate Mississippi is still adding to its roster of angel investors, most of whom are either Mississippians or people who went to school in Mississippi.

Innovate Mississippi initially evaluates concept-stage companies through a rigorous online checklist developed by Dr. Randy Goldsmith, former Innovate CEO. The checklist helps Innovate Mississippi determine whether a technologically risky company is worthy of assistance, Jeff said.

“We connect them to resources they need to continue down the development path,” he added, and noted the resources are often attorneys specialized in patents, business formation or securities, as well Web developers and marketing and research professionals.

Securing money is often the last step, Jeff said.

And at some point, the creator of the enterprise must decide how far to go in terms of individual commitment. “If they are going to lineup on this, they must be prepared to quit their day job,” he said.

Looking ahead, Jeff said he sees an easing of some of the difficulties in obtaining venture capital and expects capital availability to increase significantly as the concept of crowd funding matures. He said he is specially encouraged by creation of the Mississippi investment site peerelevatefunding.com, a website portal to help connect investors with companies seeking to raise capital.

“We now have resources that allow any Mississippian to invest,” Jeff said. “This could really change the landscape.”

Jeff said investment in start-up companies is higher than ever and the regions receiving the investments are more varied than in past years. Not too long ago, 70 percent of venture capital deals occurred in California.

“That is not the case anymore.” Jeff said. “The Southeast can have half of what California has.”

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