University of Montana has become the sole institutional limited partner (LP) in VC firm Next Frontier Capital’s second fund, a $38m vehicle that aims to support high-value Montana industries, VentureBeat reported yesterday.

The fund’s other LPs have been drawn from a range of unnamed individual investors. Will Price, founder of Next Frontier Capital, will act as its general partner.

Next Frontier Capital backs startups from industries crucial to Montana, such as software, healthcare, optics and photonics. It is unclear whether the new vehicle will in any way favour University of Montana spinouts.

The fund has already invested in two companies – with a target portfolio size of 10. It backed cybersecurity developer Ataata’s $3m series A round in December 2017 and a $20.3m round for mapping app developer OnXmaps last month.

University of Montana had also joined Next Frontier Capital’s first vehicle in 2015 through its University of Montana Foundation. The $21m fund has 10 portfolio firms, such as US-based customisable form platform Submittable and chronic pain management tool developer SiteOne Therapeutics.

Price said Montana-based startups generated $83m in combined funding in 2017, up from approximately $6m two years earlier. He noted that regional venture funds often struggled to drum up enough interest from institutional LPs.

Price added: “They do not believe it is going to generate returns. If you are managing the Ohio teachers’ pension fund or something, your allocation of venture is probably 3%. Your allocation of regional venture capital probably does not exist.”