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.
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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.
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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.”