Starting in the spring, a new Small Business Association (SBA) loan program — the Community Advantage loan program— will increase the availability of loans (up to $250,000) to: 1) small businesses, 2) firms that are less than two-years old or 3) those owned by veterans. The program specifically will target businesses in low- to moderate-income communities. Currently, small businesses face difficulty receiving loans of this size due to perceived risk involved (historically high default rates).

Deep cuts to higher education and reorganizing economic development efforts are common themes in executive budget proposals across most of the country as governors seek to both reduce spending and create jobs. Iowa Gov. Terry Branstad recently introduced legislation to replace the state's existing economic development agency with a public-private partnership. Meanwhile, his budget eliminates the Iowa Power Fund, established by the legislature in 2007 to invest in private sector renewable and alternative energy industries. In Massachusetts, Gov.

U.S. venture capitalists invested $21.8 billion in 2010, a 19.4 percent increase over 2009 and the first increase in venture investment since 2007, according to the National Venture Capital Association (NVCA) and PricewaterhouseCoopers Moneytree Survey. The growth in activity affected nearly every industry, particularly clean energy software and Internet-specific companies. Early stage investments, though not seed stage investments, grew by double-digits as did first-time financings. In addition to the gains in venture dollars, VC deals grew to 3,277, a 12 percent increase over 2009.

The fourth installment of SSTI's Tech Talkin' Govs series includes excerpts from speeches delivered in Alaska, Delaware, Hawaii, Michigan, Missouri, Nevada, and Vermont. The first three installments are available in the Jan. 5, Jan. 12 and Jan. 19 issues of the Digest.

Gov. Martin O'Malley last week unveiled details of his proposed $100 million venture fund announced last year during his re-election campaign as an initiative to grow the state's knowledge-based industries, particularly within the life sciences sector (see the June 9, 2010 issue of the Digest).

Funding for university-based research initiatives would be cut significantly under Gov. Nathan Deal's proposed FY12 budget as the governor aims to close a projected deficit of nearly $1 billion. The Georgia Research Alliance (GRA), a nationally recognized model for creating and sustaining tech-based economies, would receive $4.5 million in FY12, a 75 percent reduction from the current year. The governor's budget also would transfer GRA funds to the Department of Economic Development, a move that would align TBED with the state's more traditional economic development efforts.

With no significant boost in funding for Michigan's economic development efforts proposed in the executive budget, Gov. Rick Snyder outlined steps to reform the way businesses are incentivized and modify the state's approach to job creation by better supporting local and regional initiatives as a means to transform the state's economy.

Lawmakers approved many of Gov. Bob McDonnell's proposals aimed at growing Virginia's technology and life sciences industries by dedicating about half of the funding requested by the governor to support R&D, commercialization, SBIR matching grants, and funding for early stage equity investments.

Government intervention in the venture capital industry might be the key to boosting the performance of venture-backed businesses, according to a recent report published by the World Economic Forum. A review of 28,800 venture-backed firms from 126 countries found that enterprises receiving moderate levels of government venture capital support outperformed other firms in terms of value creation and patent creation.  Read more ...

Most impact models look at broad measures, sometimes including multiplier estimates for indirect effects. Connecticut Innovations (CI) takes a different approach, but one that might be expected from the venerable equity investment program – the direct capital return to its initial stakeholder, the state.

Bottom line: the program pays for itself, according to recent impact study performed by Connecticut’s Department of Economic and Community Development.. In fact, it has paid nearly $2 for every dollar invested between 1995 and 2008.

Last year venture investment decreased to its lowest level since 1997, according to the latest Moneytree Report from PricewaterhouseCoopers and the National Venture Capital Association (NVCA).  A weak environment for exits and increasing caution on the part of investors contributed to a 37 percent decrease in investment dollars and a 30 percent decline in venture deals from 2008 levels. This marks the second consecutive year of declining venture dollars and deals.

U.S. venture capital fundraising and venture-backed exits improved marginally in the fourth quarter of 2009, despite having a very slow year overall, according to the National Venture Capital Association (NVCA). Venture fundraising increased to $3.8 billion in the last quarter, an 82.6 percent increase over the previous quarter but still far short of fundraising levels in recent years. While investors expect activity to grow in 2010, most predict that the industry will remain smaller than its scale in the 1990s and 2000s, with fewer firms and increasing focus on late-stage deals.

VC Investment Up As Cleantech Sector Hits Record High

Gov. Deval Patrick signed into law last week an economic development bill that includes the creation of the Massachusetts Growth Capital Corporation to provide access to capital and mentoring for small businesses capitalized with $35 million, and a $5 million recapitalization of the Massachusetts Technology Development Corporation to provide funds for early stage technology startups. The bill also reorganizes and consolidates economic development agencies focused on regionally based efforts to grow and attract businesses to the state, according to a press release.

Two recent papers shed light on the distribution and benefits of entrepreneurial capital. A CB Insights' report on the "human capital" of venture-backed Internet companies finds that vast majority of company founders are white. They also tend to be between 35 and 44 years old, male and have MBAs. The second report provides evidence that getting angel capital boosts a company's odds of survival, securing additional funding and faster growth. These benefits derive not only from the injection of capital, but also from the sustained guidance and supervision provided by angel groups.

An initiative in Iowa to disperse tax credits worth 20 percent of equity investments into pre-qualified businesses or seed capital funds has reached its $10 million cap and will not be continued in the next fiscal year. The Iowa Venture Capital Credit – Qualified Business or Seed Capital Fund was started in 2002 with a cap of $10 million, and as monitored by the Iowa Department of Revenue, all credits have been issued.
 

New York City officials recently announced the launch of a $2 million seed fund to boost entrepreneurship and the local venture capital market. NYC Seed will provide up to $200,000 for seed-stage New York-based businesses and will offer mentoring and other support for client companies.

Venture investors are increasingly turning to overseas markets for promising investments in key high-tech industries, according to the 2008 Global Venture Capital Survey conducted by Deloitte and the National Venture Capital Association (NVCA). The annual poll of 400 international venture capital investors found that the U.S. is still perceived as the strongest technology economy in all sectors, but other countries are developing industry specializations that allow them to be competitive with the U.S. in one or two particular areas. While no single country is likely to overtake the U.S.

While California and Massachusetts may overshadow much of the venture capital (VC) activity going on around the country, other states have made significant progress in developing venture industries that serve the needs of their economy. Though larger investments in later-stage companies are becoming more prevalent in the U.S. venture industry, some states are seeing increases in smaller, early-stage investments that, if successful, should lead to significant growth in their total VC investment in years to come.

With the recent news that initial public offerings and mergers and acquisitions for venture-back companies are becoming scarce, many are anticipating a national venture capital crisis. A lack of exit opportunities could lead angel and venture investors to become more hesitant to invest at any stage of venture development as they seek opportunities that produce a return in the foreseeable future.

Despite ongoing concern about the lack of venture-backed initial public offerings (IPOs), venture investment held steady at $7.4 billion in the second quarter of 2008, according to the Moneytree Report published by PricewaterhouseCoopers and the National Venture Capital Association (NVCA) based on data provided by Thompson Reuters.

Venture capitalists invested $7.1 billion in companies during the third quarter of 2008, according to the latest Moneytree survey from PricewaterhouseCoopers and the National Venture Capital Association (NVCA). Though this figure represents a nine percent decline from the same period last year, investment levels still show little evidence of the current drought in venture-backed exits.

Gov. Bill Ritter announced his administration's plan to inject $12 million into initiatives that promote job training, provide small businesses with access to capital, and invest in the state's New Energy Economy and bioscience sectors.