ADFA Supports Life Sciences Seed and Early Stage VC Fund

Arkansas Institutional Fund Commits $4.5M to Prolog Capital II

May 19, 2005 | Little Rock, AR -- The Arkansas Development Finance Authority (ADFA) closed on a $4,500,000 commitment to invest in Prolog Capital II, L.P. an early stage life sciences venture capital fund headquartered in St. Louis MO.

The announcement was made at the Fourth Annual Arkansas Venture Capital Conference that was held in Little Rock this week. Prolog was one of several institutional venture capital fund sponsors of the Conference. Prolog also participated in a panel discussion on how the private equity firms that serve this region seek to deploy their capital, and joined with angel investors across the state to capitalize the Fund for Arkansas’ Future (FAF).

Prolog has raised a total of $51,000,000 for their second fund. Prolog II is a venture capital fund organized to generate superior capital appreciation based on a portfolio of investments in early-stage life sciences companies. Prolog will seek a balanced exposure to four key life sciences sectors: biopharmaceuticals, medical technology, agriculture and nutrition, and healthcare information technology. The key selection criteria will include novel functionality, technical validity, the potential for strong intellectual property positions and large accessible markets. The firm has committed to actively address the Arkansas market by employing a person in state to help them identify potential deals. In addition, they will put together a volunteer advisory board made up of select individuals from various regions of the state to make sure all potential opportunities are surfaced.

FAF’s principal office is located in Little Rock, AR. The fund’s investment focus is on seed and early stage companies throughout Arkansas. A strong component of FAF’s mission is economic development through the capitalization of companies that have the opportunity for rapid growth and that will create well-paying jobs in the state. On a very selected basis, other opportunities, including without limitation early stage and possibly expansion stage financings will be considered for entities that have identified a significant market opportunity and need. Investments often, but not always, will be in technology or biotechnology-related companies. FAF will not be limited to or necessarily exclude any particular industry. ADFA’ s $100,000 investment will bring FAF’s fund total to $5.25 million.

ADFA Vice President of Development Finance President, Gene Eagle, indicated that "making these announcements regarding the initial fund investments is exciting, but what I am really looking forward to is down the road, and seeing one of the Arkansas companies funded by Prolog II as a legitimate home grown success story. Real economic development occurs when outside private equity capital is invested into a local business opportunity."

ADFA’s investment was made through the Arkansas Institutional Fund (AIF), managed by Cimarron Capital Partners. The AIF is a $70 million fund of funds, supported by ADFA, that invests to help build the professional venture capital industry that serves Arkansas entrepreneurs.

"We were pleased to recommend the investment in Prolog II," said Michael Tharp, AIF Fund Manager.

About the Arkansas Development Finance Authority

The Arkansas Development Finance Authority is committed to responding to the changing needs of Arkansas’ growing, increasingly diverse population and business community. Since its creation in 1985, ADFA has become the state’s largest source of low-cost financing for low-to-moderate income housing development, small industries, government, education, agricultural business enterprises and healthcare. Through the issuance of taxable and tax-exempt bonds and notes, the administration of private and public grants and partnerships with state and federal agencies, ADFA gives Arkansans the most cost-effective financing choices possible. In 2001, bond guaranty legislation was modified to allow ADFA to utilize credit enhancement and state tax credits to finance “fund of funds” venture capital investments. At this time the $70 million Arkansas Institutional Fund (AIF) was created.

About the Arkansas Institutional Fund

In an effort to strengthen the venture capital network in Arkansas and promote economic growth within the State, the Arkansas Institutional Fund (AIF) is authorized to invest in professionally managed venture capital funds that in turn make risk capital more accessible to promising Arkansas firms.

About Cimarron Capital Partners

Cimarron is a leading national investment management firm specializing in regional private equity. The firm serves as fund manager for the Arkansas Institutional Fund (AIF).