Venture capitalist abandons effort to create Minnesota early stage fund(?)

Jim O’Reilly is calling it quits.

The venture capitalist and entrepreneur says he’s pulling the plug on Upwind Medical Partners, which had hoped to raise $6 million to $8 million to commercialize technologies from healthcare/research institutions like the University of Minnesota, Wisconsin Alumni Research Fund (WARF) and Allina Hospitals & Clinics.

O’Reilly said it was “fairly impossible” to raise money. A weak economy and non-existent demand for initial public offerings has prompted investors to avoid new deals and focus instead of exiting current portfolios.

Upwind’s demise is only the latest disappointment to hit Minnesota’s early stage venture community after a promising start in 2010. Affinity Capital Management and Triathlon Medical Ventures abandoned plans to create a $10 million seed fund, citing a lack of interest from investors.


A long promised $1 billion fund from biotech investor Steve Burrill to back the Elk Run BioBusiness Park in Pine Island, Minnesota has yet to materialize. Ditto for Coordinate Capital, a Burrill-affiliated fund in Minneapolis, that had hoped to raise $25 million.

For O’Reilly, explaining Upwind to potential investors proved to be a challenge in itself. For one thing, O’Reilly insisted Upwind was not a “fund” but rather a “new model” for developing startups.

Here’s how Upwind would have worked: the company will create companies based on near market-ready intellectual property that can deliver liquidity in a relatively short period of time (four years) either through a sale or licensing. While venture capital firms will typically fund one or two potential blockbusters over several years, Upwind will generate modest returns from developing many less ambitious companies in a lot less time.

O’Reilly said he’s mulling a few offers from the securities industry but has not made a decision on his future plans. He might even try to launch Upwind again in the future.

But he admits “last year was just a terrible time to do it.”

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