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Utah Innovation Fund, created to aid local startups, eyes ‘impactful’ projects

By Nichole Whiteley - Daily Herald | Dec 12, 2023
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Gabi Tellez, managing director of the Utah Innovation Fund, speaks at a press conference Monday, Dec. 11, 2023, at the Utah State Capitol, where the fund's investment in three companies was announced.
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Hunter Manz, CEO of Eden Technologies, speaks at a press conference Monday, Dec. 11, 2023, at the Utah State Capitol, where the fund's investment in three companies was announced.
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Gov. Spencer Cox speaks at a press conference Monday, Dec. 11, 2023, at the Utah State Capitol, where the fund's investment in three companies was announced.
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Rep. Jefferson Moss, managing director of the Utah Innovation Fund, speaks at a press conference Monday, Dec. 11, 2023, at the Utah State Capitol, where the fund's investment in three companies was announced.

When the state’s new Utah Innovation Fund was established through legislation earlier this year, the aim was to dream big.

“The way that we measure success … is really in solving these big, impactful problems,” said Gabi Tellez, managing director of the UIF, a state-backed venture capital fund that invests in startup companies connected to universities or colleges believed to show promising future growth and that create innovative solutions to some of Utah’s largest issues.

Tellez joined Gov. Spencer Cox and others Monday at the State Capitol to highlight one of three ventures being supported by the state through the UIF: Eden Technologies, whose goal is to eliminate water scarcity worldwide.

The idea for a fund that invested in local, startup businesses was born from the efforts of Rep. Jeff Stenquist and Sen. Ann Millner, “who saw important, life-changing research being shelved because of lack of local funding — or worse, being taken outside of Utah to be developed and commercialized elsewhere,” Cox said.

The fund was established with $15 million. Tellez explained that for a company or business to be eligible for funding, they must have some sort of connection to higher education.

UIF invested $250,000 in Eden Technologies and has part ownership in the company. However, support is provided in more ways than just financially, CEO Hunter Manz told the Daily Herald.

In addition to connecting the company with other investors, the fund helped connect them both with a center where they can test their water system and to people with expertise in engineering, business and negotiating deals.

Manz explained that most investors want to invest in software rather than building physical products, like a water treatment plant, because the return on investment takes longer. However, he said, “Software by itself will not save the world. We need real, physical solutions, and lucky for Utah and the rest of the world, they’re already here.”

Manz expects this to be the company’s last round of fundraising because in the future they will be creating their own revenue from customers.

According to Tellez, the fund invests in startups with the understanding that the return on their investment will come long down the road.

“We are hopeful that in 10 to 12 years that we can look at those and any money that’s returned from any of these companies and the success goes back into the fund,” she said. “So we want to have a fund that’s self-sustaining, an evergreen fund, but it’s largely (focused) on the impact and problem solving.”

The money used to invest in startups is not taken from taxpayer funds. In addition, the seven people on the board of investors who choose which startups to invest in are volunteers. Tellez explained that the money the fund receives from the companies they have invested in goes back into the fund to invest in other companies.

While the fund was given an initial $15 million by the state, the UIF is expected to eventually become financially self-sustainable and bring in enough revenue to continue investing in other companies without needing more funding from the state.

When asked how the fund will affect Silicon Slopes and colleges and universities in Utah Valley, Cox said the UIF will have the opportunity not just to work with top research institutions, but also with all higher education institutions across the state, including private universities. “So Utah County is definitely going to benefit,” he said.

He explained the state is excited about the growth Silicon Slopes has seen, and they fully support it. However, he added, the technology hub already has a significant amount of venture funding. “There are great ideas coming from students and professors at some of our smaller institutions as well, and now they have access to this innovation fund,” he said. “So, it’s definitely going to help the Wasatch Front. … I’m also excited about the ways it’s going to help some other places in Utah that haven’t had those opportunities.”

Besides Eden Technologies, the UIF also has invested in 3 Helix and Inherent Biosciences. Cox explained the services the fund provides to each of the startups they invest in aside from the financial services: “These services include an operator database, where people across the state who have successfully started, exited or operated a startup are connected to those who are starting their own journey and need leadership and business guidance; a business service network of financial firms, marketing groups and law firms that we can refer our startups to for support as they build their companies; a team of industry advisors, technical experts and experienced investors who contribute their expertise and valuable insight during the fund’s due diligence process as they validate the market interest and technical viability of the startups products.”

For those fresh out of colleges who have just started a company, designed a product or have an idea for one, the financial and other resources UIF provides, he said, “is a lifeline and puts Utah, again, as a leader in solutions.”

According to Manz, Eden Technologies has developed a system that turns seawater or brackish water into freshwater more efficiently, reducing overall costs for a water plant while making it more environmentally sustainable.

He told the Daily Herald that a typical water plant is 30% to 50% efficient, meaning from all of the water brought in, only 30% to 50% is transformed into fresh water that can be used. For large plants, he said, this can cost hundreds of millions of dollars.

But Eden Technologies can come in and create an entirely new plant or add onto an existing plant without significantly increasing the capital and energy costs, he claimed, and through their system can change the plant to 70% to 88% efficiency. The result not only is a reduction to the cost of running a water plant and the time it takes to desalinate water, but an increase in the production of freshwater.

The company is currently raising funds, but they have tested their system in preparation for two planned plants. They have been working with the Navajo Nation in Arizona as well as Saudi Arabia.

Rep. Jefferson Moss, associate commissioner of innovation for the Utah System of Higher Education and managing director of the UIF, said from the beginning, the conversation has been focused on supporting not just the Wasatch Front, but schools across the entire state. He said the UIF will be housed within Convergence Hall at The Point, as a way to support students and entrepreneurs from everywhere in the state by bringing them together to engage with one another and with those who are leaders in the industry.

The Point is a future mixed-use development at the site of the former Utah State Prison, which closed in 2015. The Point will have buildings start going up by 2025 for Phase 1.

Moss said in regard to UIF having a presence at The Point, “We see that as a way where a lot of our students that are doing really cool startups, professors that are spinning out research, that’s a place where we’re going to bring a lot of those together. So, having a fund there to be able to interact, and to be aware of and help support these spinouts, it just makes sense to have that housed there.”

He explained much of the initial screening of companies the fund could potentially invest in is done by students. There are already 10 and soon will be 20 students from across the state who will help in the screening and due diligence.

“This is a really cool way for students that want to get experience in venture capital that want to look at, ‘How do you decide if something has the potential to really be a market advantage business?'” Moss said.

On the flip side, those who are starting a business will have a place they can come to gain exposure to venture capitalists, possible business partners and others in the business world whom they could work with or learn from.


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