Venture-capital firms invested nearly five times as much venture capital into Ithaca–based companies than Syracuse–based firms last year. Ithaca–area companies received about $20 million in venture-capital funding last year while Syracuse–area companies received $4.75 million, according to Zachary Shulman, managing partner of the Cayuga Venture Fund (CVF), and a MoneyTree Report, a quarterly study of venture-capital investment activity in the United States (produced through collaboration between PricewaterhouseCoopers and the NVCA and based upon data from Thomson Financial).

Ithaca not only has innovative technology developers coming from Cornell University, but also the venture capital to back it up. The strong venture-capital environment is led by Ithaca–based CVF, says John Majeroni, director of the Cornell University Real Estate Department, which is part of the Cornell Business & Technology Park, a suburban office park that offers office and incubator space. CVF is located in one of the park’s 24 buildings.

Shulman, who is also the J.T. Clark Senior Lecturer of Entrepreneurship at the Johnson Graduate School of Management at Cornell, says many of CVF’s portfolio companies use Cornell technologies.

CVF’s portfolio companies include: Advion BioSciences, Inc.; BinOptics Corporation; Calient Networks; Ecovation; InSciTek Microsystems, Inc.; Kionix, Inc.; Primet Precision Materials, Inc.; and Viral Therapeutics, Inc.

CVF was founded in 1996 with an initial $1.6 million fund. Forty people networked together and invested in the fund, says Majeroni. As a result of increased interest, the 40 investors personally invested an additional $19.4 million, Shulman says. The second fund began in 2002 with $12.5 million, including an additional $11 million coming personally from investors, he adds. A third fund began in January 2006 with $15 million raised so far. CVF has invested $5.25 million from the third fund, Shulman says.

The venture-capital firm invests in technology companies, with a soft spot for university-technology transfers, says Jennifer Tegan, partner at CVF.

“The Cornell connection is very important to us,” Shulman says.

The Ivy League university offers initiatives that support both community and student entrepreneurialism. Michael Stamm, president of Tompkins County Area Development, says Cornell has responded to entrepreneurs’ demands for services that allow them to access the Technology Transfer Office, the Cornell Law School, and the Johnson School of Management.

“Cornell is a driver of entrepreneurial activity,” Shulman says.

Via the Shared Experimental Facilities at the Cornell Center for Materials Research (CCMR), researchers from companies can rent time at university facilities for a fee. The facilities give local companies access to expensive equipment that would otherwise be unaffordable, Shulman says.

There are nine shared facilities with more than 20,000 square feet of space. Their titles are: Electron and Optical Microscopy; Hudson Mesoscale Processing; Ion Beam Analytical; Materials; Molecular and Cellular Surface Imaging; Polymer Characterization; Research Computing; Keck Field Emission SEM; and X-Ray Diffraction Facilities.

Leonard Dolhert, president, CEO, and co-founder of Primet Precision Materials, Inc., says the Shared Experimental Facilities are important to the company. While the materials-technology company has most equipment in-house, expensive equipment such as electron microscopes, atomic-force microscopes, and devices that measure catalytic activity are used at Cornell.

The entrepreneurial support structure at Cornell also includes help for the youngest companies.

The Johnson Graduate School of Management at Cornell features Big Red Ventures (BRV), a student-managed, venture-capital firm that invests in seed-stage companies, which are new companies. BRV also has a board of advisers comprised of investors, venture capitalists, and faculty to assist the students. Typically, BRV invests $40,000 to $100,000 per deal. Currently, BRV manages $1 million, says Shulman, BRV’s general counsel.

BRV’s investments include California–based SightSpeed, an Internet–based video conferencing company; Ithaca–headquartered Gene Network Sciences, a systems biology company; California–based Medical Care Corporation, an Alzheimer’s detection company; Lansing–based NovaSterilis, a biomedical technology company; and Chicago-based Experience Enterprises, LLC, an interactive retailer.

“It’s a great learning experience for students,” Shulman says.

While Ithaca’s entrepreneurial environment is prominent, Syracuse’s is lacking in comparison. Shulman attributes that to Syracuse’s industrial stigma as a result of its dependence on large industrial firms like manufacturers to drive the economy in the past and somewhat still today. Ithaca’s economy is more attuned to entrepreneurial activity, he contends.

The small size of Ithaca is also an advantage, Shulman says. This allows Cornell to have a dramatic impact on the small community, he adds. SU’s quality initiatives can’t drive entrepreneurial activity because the city of Syracuse is too large, Shulman explains. However, if SU was located in a smaller community, it would have more of an impact, he adds.

Some companies have relocated to Ithaca because of Cornell.

Primet Precision Materials moved to Ithaca from Columbia, Md., in 2003 because of Cornell’s nanomaterial expertise, Dolhert says. Cornell has more than 100 professors working on nanomaterials.

Primet Precision Materials’ collaborations with the university don’t end there. The company also has the license to commercialize Cornell technology, such as catalysts for fuel cells, Dolhert says.

The company has 10 full-time and 15 part-time employees and consultants. Revenue details weren’t disclosed.

Dolhert’s search for venture capital began when the company relocated. Primet Precision Materials received a total of $3.4 million in venture-capital funding from CVF and the well-known Silicon Valley–based venture firm Draper Fisher Jurvetson, Dolhert says. The funding was used to increase staff and buy equipment for its 4,000 square-foot facility, located at 1005 Hudson St. Extension.

“We went from having nothing in Ithaca to having everything in Ithaca,” Dolhert says of what venture capital provided for the company.

Tegan says the venture-capital firm just couldn’t say no to investing in Primet Precision Materials. The company’s business plan and technology were exceptional, Tegan says.

Dolhert plans to keep Primet Precision Materials in Ithaca and grow it into a billion-dollar company. In 2007, Dolhert plans to raise $8 million to $20 million in venture capital to hire more employees, buy more equipment, and expand space and manufacturing capabilities. Dolhert says he plans on seeking another round of venture capital from CVF and Draper Fisher Jurvetson. He also plans on looking for funding from new investors. He declined to name them.

“Venture capital is no longer a bad word [in Ithaca],” Shulman says.