Jun. 17–‘Recession-proof’ biotech firms are solid venture-capital candidates, an industry expert says.

William Paiva gets frustrated almost daily when he reads newspaper accounts about how the economy is in trouble.

He notes that there are some shining stars worth focusing on in today’s marketplace, and the health-care industry is one of them.

“I truly believe that health care remains to bring a bright future for Oklahoma,” said Paiva, general partner with Chisholm Private Capital Partners and manager of the Oklahoma Life Sciences Fund LLC.

Paiva gave an overview Monday of the biotech industry in Oklahoma and a profile of the Oklahoma Life Sciences Fund. His presentation was part of the luncheon series hosted by the Oklahoma Investment Forum at the Downtown Doubletree Hotel.

The Oklahoma Life Sciences Fund is a limited liability company created to take advantage of private equity investment opportunities in the field. The $5.1 million fund invests in the most promising early-stage life-science companies that are not yet able to attract venture capital.

Health care is a great place for venture capital investing, in part because it is “recession proof,” Paiva said.

“When the economy goes south, people in business can wait to get high-speed Internet in their office or homes, but if you get diagnosed with cancer, you’re not going to wait a year to start a (drug treatment) regimen,” he said.

Health care represents a $1.3 trillion industry that is expected to grow to $2.6 trillion by 2010.

Among factors contributing to the industry’s growth are an aging population, the need to find ways to control costs and to address quality-of-life issues, Paiva said.

When Paiva was being hired to run the fund in 2000, he was cautioned that he would be working with a modest amount of money in a sector that not a lot of people were interested in, and in a part of the country that was not known for its health-care industry.

“I said, `Sure, why not,’ ” Paiva recalled, provoking chuckles from his audience.

The timing happened to be just right because as other sectors such as information technology started imploding, the health-care industry subsequently started gaining more attention.

The Oklahoma Life Sciences Fund was started with the goal of advancing Oklahoma health-care technologies. As part of its investment criteria, the fund looks at proprietary Oklahoma-based life science and medical technologies only, Paiva said.

The fund also looks for areas that have a large, high-growth market potential and the ability to attract talented management.

The fund has evaluated 50 health-care deals and invested in five companies, including Inoveon, a medical services outfit that delivers solutions to detect, stage and monitor diseases affecting the eye.

Tulsa-based Incentus Inc., although not part of OLSF’s company portfolio, has received funding from Oklahoma City-based Chisholm Private Capital Partners. Incentus provides technology to help employers control benefit costs by informing, advising and empowering employees to assume more responsibility for benefit selection and spending.

Paiva said that from Boston to San Francisco, there are many venture capital funds chasing very few deals. He noted that only 25 percent of venture capital firms will do health-care investments, and almost all require a local lead investor.

“They’re looking for new geographies that are untapped,” he said. “So they view Oklahoma as sort of an untapped market that’s got a strong base behind it.”

Oklahoma benefits from having world-class health-care facilities and a strong research base, which includes the University of Oklahoma, the OU Health Sciences Center, Oklahoma State University, the Oklahoma Medical Research Foundation and the Noble Foundation.

Also Monday, SouthWest NanoTechnologies Inc. was the luncheon’s showcase company, with William E. Nasser, the company’s president, chairman and chief executive, giving the presentation.

SouthWest NanoTechnologies is a privately held independent specialty chemical firm that manufactures single wall carbon nanotubes for a broad array of specialty products.

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