By guest authors Irina Patterson and Candice Arnold
Irina: What are the fees for the peer technical reviews?
Joe: There is no application fee to apply to MTI. We will pay the thousands of dollars to go out and get those peer reviews done out of our budget. The internal state folks from industries and universities in Maine, those are volunteers. They’ll dedicate significant amounts of time each year to review each proposal.
There’s some paid review that has to happen, and the rest are volunteers – you know, business leaders, venture capital folks, financiers, and scientists. We try to have a broad spectrum of folks who help with internal review, but that’s all [on a] volunteer [basis].
Irina: How many investments do you have in your portfolio at this time?
Joe: We’ve made over 1,300 individual project investments across 600 companies over 10 years. But I would say for active, open work in our portfolio, at any given time, we’ve probably got about 100 open projects.
Irina: Do you think in terms of the valuation of a company?
Joe: That’s a good question. Many times, the companies we’re investing in – sometimes we co-invest with angel and venture capital folks, and there may be a valuation assigned to a company if they’ve done a series A round or something like that – have not, or probably should not, be attempting to do valuation at this early stage.
Much of the co-investment that comes from angel or venture capital folks, we typically see as coming in with some type of convertible debt vehicle, which effectively kicks the need to do a valuation down the road a bit. It’s very difficult to place a valuation on some of these early stage companies.
Frankly, some of the companies we invest in are going concerns, so a valuation isn’t needed. We’ll investigate the financials. We’ll look at cash flows. We’ll look at historical financials. We’ll look at profit and loss. We’ll investigate those, but, especially for the going concerns, a valuation on the company is not always needed.
In some cases, when we get to the more advanced stages of our investment, the equity or convertible vehicles, there may be a valuation that we will take into consideration. Periodically, companies looking for investment will come in and tell us what they think their valuation is, but in many cases, those valuations are probably either inappropriate or not valid models to evaluate companies at such an early stage, especially pre-revenue stages.
Irina: Do you have strategic partners, and how do you work with them?
Joe: Yes, we do have strategic partners. Some we have formal agreements with, and some are collaborative partners.
In the state of Maine services, we always think of the Finance Authority of the State of Maine. We have the Department of Economic and Community Development. We work with the small-business development centers from time to time.
[We’re] specifically mandated to work and align ourselves with some of the research that’s taking place in the Maine university and community college system.
On the private side, we work with groups like the Maine Angels. Maine also has a state-funded venture fund called the Small Enterprise Growth Fund. There are a few business incubators in Maine, and the Target Technology Center incubator in the Bangor area, near our flagship land-grant university.
In our larger city, Portland, we work with the Maine Center for Enterprise Development, not to forget that we also have good trade associations in the state that we work with. To name a couple, Tech Maine started as more of an IT technology trade association, but they’re morphing into more general technology support.