A formerly state-backed investment organization for Kansas bioscience businesses will soon be transitioning from a public to private organization.
After dwindling support from the State of Kansas, the Kansas Bioscience Authority’s board recently voted unanimously to shift the organization to the private market in 2016, allowing portfolio companies to partner with investors in the private sector. The move will allow the organization to retain its employees and better position it for growth, the organization said in a release.
Also, as part of the new direction, current KBA CEO Duane Cantrell will be departing the organization on Jan. 1. Kevin Lockett, who previously served the organization as chief financial officer, will lead the KBA’s transition to the private sector as the new chief executive officer.
“Based on current realities, privatizing the KBA best serves the Kansas bioscience industry, KBA’s portfolio of companies, the state of Kansas and the organization,” Cantrell said in a release.
Founded in 2004, the KBA aims to accelerate growth in Kansas’ bioscience sector and create high-paying jobs, fuel capital expenditures and encourage private capital investments in bioscience companies. The KBA invests in animal and human health, agribusiness and life sciences, including companies such as Flow Forward, Metactive, Aratana and Innara Health.
Lockett said that that the KBA’s portfolio has nearly doubled in value over the past three years and that it’s his intention to ensure Kansans’ investments in bioscience businesses will continue to pay dividends. The current value of KBA assets held in startup investments is between $32 million and $34 million. Also, the organization has nabbed back assets worth $19 million through portfolio companies’ initial public offerings or exits.
The State of Kansas support of the KBA has waned in the last year as a result of its budgetary crisis. Kansas faces a massive projected $600 million shortfall as a result of the legislature’s slashing of personal income taxes in 2012 and 2013.
Nick Franano, CEO of two KBA portfolio companies, Metactive and Flow Forward, said that the KBA has performed admirably despite Kansas’ lack of support.
“We might as well call this what it is, a closing of KBA and a liquidation of their assets,” Franano said. “In my view the leadership of the KBA played a bad hand about as well as they could, but in the end their once successful organization looks to be yet another casualty of self-inflicted wound that is the ongoing budget crisis in Kansas.”
He added that without the KBA the State of Kansas will have a lone program supporting early-stage business creation — and it’s one that will soon be sunset.
“With the end of KBA, the last remaining tool in the startup tool box for the State of Kansas is the Angel Investor Tax Credit program,” he said. “If that program is not renewed in 2016 then I think you will see startups move from Kansas to Missouri seeking support from the region’s remaining programs, such as the Missouri Technology Corporation’s IDEA Funds and Kansas City’s Launch KC and Digital Sandbox.”