|
Beta-Rubicon,
Inc. NEWS ARTICLEPUBLISHED DATE: August 29, 2004 SOURCE: The Morning News; "Goforth Says Tough Row to Hoe for
Technology Companies in Arkansas"; by Ethan Nobles "We need less talk and more action," said Ron Goforth, president of Fayetteville-based Beta-Rubicon. "I'd really like to see things start to move. "The rest of the world is not standing still. It's moving forward." Goforth said the Alpha Fund illustrates a major problem in financing technology companies. The Alpha Fund was formed in 2002 with the intent of raising a pool of $5 million for investing in early-stage technology companies. John Nock, an investment banker with American Municipal Securities in Fayetteville, is one of the managers of the Alpha Fund. Nock said attracting investors to the fund was difficult and, ultimately, commitments for around $1 million were secured. However, that money was sent back. Nock said he's still an Alpha Fund investor, and the pool has provided money for two companies over the past two years. He said the Alpha Fund still exists, but officials have decided the business model giving rise to the fund has to be tested -- it will be easier to attract investors if some of the companies receiving money from the fund prove profitable. "What a tremendous opportunity that would have been, but we couldn't get a major player behind it," Goforth said of the Alpha Fund. Beta-Rubicon exists to assess the viability of new technologies. The company was retained to advise the Alpha Fund board about which new technologies stood a good chance of making a profit and which ones didn't. Nock said the risky nature of technology companies frightens some investors. He said that very reluctance has retarded the growth of the Alpha Fund. "A lot of people were enthused, but it's in unknown territory," he said. "Even though it looked good on paper, people were reluctant to do it." Nock said investors, by nature, are repelled by risk. So, the Alpha Fund was formed with the intent of helping fund companies which had a good chance of being profitable. In addition to requiring an assessment from Beta-Rubicon, Nock said the Alpha Fund board wanted to finance companies eligible for federal Small Business Innovation Research grants. He said companies receiving SBIR grants go through a fairly-intensive assessment. An approval for one of the grants is hard to get, Nock said -- a company receiving an SBIR grant is generally viewed as one that has a good chance of being profitable. Goforth said the development of technology companies is also crucial because they help keep highly-trained Arkansans in the state. He said the state government invests heavily in students and loses out if a person receives an engineering degree from the University of Arkansas and goes to Texas to work because he can't find a job locally. Goforth said Beta-Rubicon, in spite of difficulties in securing financing, will remain in Fayetteville. He said Beta-Rubicon has nine full-time employees, with seven in Northwest Arkansas. Also, he said the company has about 150 experts on contract -- people with specialties in various fields called in to assess various technologies. "We decided to contribute and get some of this technology growth going," Goforth said. Rick Huntsinger, former owner of and president of Arkansas Surgical Supply in Springdale, started this month as chief operating officer of Beta-Rubicon. He said companies like Beta-Rubicon are necessary to keep people with highly-technical skills in Arkansas. "We, I think, have the potential to positively-influence the technology industry in the state," he said. Huntsinger said one crucial component to forming technology companies is clustering -- creating an environment in which knowledge-based businesses can group together and influence each other. Goforth said such clustering needs to be done by Arkansas companies. Therefore, investors in the state are needed to provide the capital to get those companies started. "We're not going to be successful, in my view, in importing a large, technology-centric company," he said. "We're going to have to grow our own." Katherine A. Deck, associate director of the University of Arkansas' Center for Business and Economic Research, said the college is trying to foster an environment in which clustering is encouraged. In September, the $6.2-million Innovation Center should open at 525 W. Research Center Blvd. in Fayetteville. The 35,000-square-foot building is designed to house technology companies and is the keystone of the Arkansas Research and Technology Park. The facility is located near the university's Genesis Technology Incubator. "It's promising as a center for the kind of technology-based clustering we'd like to see," Deck said. Deck said there are at least two challenges faced by people pushing for technology development in the state -- defining what is meant by technology companies and being patient because creating an essentially new industry "doesn't happen quickly." "It's so important that everyone is on the same page," Deck said. - # # # - |