Financing of Insight Illustrates State's Venture Capital Problems
Case, Patti, THE JOURNAL RECORD
In spite of the fact that the company has already raised $1.2 million, and projects employment of 120 persons by mid-1987, there is no adequate source of venture capital to bolster the fledgling enterprise, said to Mike Woelffer, director of economic development for the Oklahoma City Chamber Commerce.
Insight Information, which moved to Oklahoma City in January 1986, is preparing to market an integrated microcomputer-based software and database product called INSIGHT for use by national professional money managers, investment bankers, investment research analysts, commercial lending officers and corporate treasury or planning departments.
While Oklahoma's financial hands are tied, Insight Information continues to negotiate its $3 million in financing through corporations and major venture capital firms, according to Gregory E. Smith, chairman and chief executive officer of the company.
Woelffer said the situation points out a problem in Oklahoma.
"We have to get going in funding our own ideas and inventions and keeping them here in Oklahoma," Woelffer said. "They (Insight Information) have no income, and they haven't proven they can generate income and make a profit, but this is a promising technological product that is almost ready to market.
"It needs capital to continue, but there is no state program to help. When a company starts experiencing that, someone (willing to finance them) will pick them off. Those companies can take an offer from someone else, and move away.
"Somehow," he added, "we've got to come up with the financial programs to keep those ideas and innovations here in Oklahoma."
Smith started the project in 1984, putting up $150,000 himself for market research. A former associate and shareholder, Fran Finnegan, added $25,000.
In March 1985, three of the company's directors and "a handful of others," injected $327,000 for design of the product and research to determine logistics and procedures for collecting data.
Another injection in January 1986 was $325,000, including $100,000 "from some local players" - the only Oklahoma investors in the project besides Smith.
Since January, the company has raised about $400,000 from existing investors for design, prototyping and implementation.
The directors - all of New York - are helping raise additional funds, according to Smith. They have been the primary financers so far, according to Smith. Those investors are:
Francesco Galesi, 55, chairman of the Galesi Group Inc. He has interests in real estate, manufacturing and telecommunications. Galesi is also a director of Argo Communications, a satellite-based long distance telephone company. Galesi is "worth $275 million in his stocking feet" according to the May 1986 issue of Manhattan Inc. magazine.
Sidney Kahn, 49, is a senior vice president of E. …