Creates the seed-NY investment fund to encourage and facilitate the creation or expansion of regional investment funds for research colleges, high-technology development and local development organizations.
STATE OF NEW YORK
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6167--B
2011-2012 Regular Sessions
IN ASSEMBLY
March 8, 2011
___________
Introduced by M. of A. SCHIMMINGER, MORELLE, LUPARDO, SCARBOROUGH --
Multi-Sponsored by -- M. of A. PEOPLES-STOKES -- read once and
referred to the Committee on Economic Development -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee -- recommitted to the Committee on Economic Develop-
ment in accordance with Assembly Rule 3, sec. 2 -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee
AN ACT to amend the New York state urban development corporation act, in
relation to creating the seed-NY investment fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 1 of chapter 174 of the laws of 1968 constituting
2 the New York state urban development corporation act, is amended by
3 adding a new section 46 to read as follows:
4 § 46. The seed-NY investment fund. 1. Definitions. For the purposes
5 of this section, the following words and terms shall have the following
6 meanings unless the context shall indicate another or different meaning
7 or intent:
8 (a) "Regional investment fund" shall mean a limited partnership,
9 limited liability partnership, a limited liability company or a not-for-
10 profit fund under experienced professional management that is familiar
11 with seed capital investment, appropriate business practices and tech-
12 nology-oriented products and services, and formed for the purpose of
13 providing private equity to technology-based companies in their form-
14 ative stages, encompasses at least two counties, and invests in quali-
15 fied enterprises located within New York state.
16 (b) "Qualified enterprise" shall mean:
17 (i) a company or a proposed company that has or will locate its prin-
18 cipal place of business in New York state, and that is, or proposes to
19 be, engaged in this state in research and development or high technology
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09996-10-2
A. 6167--B 2
1 manufacturing, and that demonstrates the potential for substantial
2 growth and job development in an emerging technology field as defined in
3 section thirty-one hundred two-e of the public authorities law or as
4 adopted by the corporation; and
5 (ii) is formulating, has formulated, or is executing a detailed busi-
6 ness plan for proof-of-concept or initial product commercialization.
7 (c) "Seed capital" shall mean financial assistance to a qualified
8 enterprise, in return for equity or debt securities or royalties.
9 2. Investments in regional investment funds. (a) The corporation shall
10 make investments to encourage and facilitate the creation or expansion
11 of regional investment funds that serve the purposes of this section.
12 The corporation shall adopt criteria and guidelines governing such
13 investments, which shall:
14 (i) demonstrate the need for seed capital in the region served or to
15 be served by a regional investment fund;
16 (ii) demonstrate that support for a regional investment fund exists
17 from local governments, economic development agencies, and business
18 communities within the region or area to be serviced by such fund;
19 (iii) require that the regional investment fund has the capacity to
20 perform due diligence in making investment decisions, and to provide
21 management expertise and other value-added services to its portfolio
22 companies which services may include access to capital, business exper-
23 tise, technology commercialization services and a network of resources
24 in order to advance the development of new technologies;
25 (iv) require that the regional investment fund establishes conflict-
26 of-interest provisions acceptable to the corporation;
27 (v) to the maximum extent feasible, require the regional investment
28 fund will invest in firms which have the greatest potential for job
29 creation;
30 (vi) require that investments made by the foundation in a regional
31 investment fund shall not exceed five million dollars and, shall be
32 matched by the regional fund on at least a one-to-one basis with monies,
33 other than state monies, unless the corporation finds that a reduced
34 matching requirement will further the purposes of this section; and
35 (vii) require that investments made by a regional investment fund that
36 include funds received from the corporation shall be made only for the
37 financing authorized by subdivision three of this section.
38 (b) (i) The corporation shall make investments in qualified regional
39 investment funds via the issuance of a request for proposals to regional
40 and local economic development organizations, technology development
41 organizations, research universities, and investment funds that provide
42 small-scale investments in high-technology companies in New York state.
43 (ii) When awarding funds pursuant to this subdivision, the corporation
44 shall assure adequate geographic distribution to the extent feasible.
45 3. Regional investment funds. (a) Regional investment funds receiving
46 investments from the corporation under this section shall use such funds
47 and the required matching funds to provide seed capital and follow-on
48 financing to qualified enterprises, provided that the regional invest-
49 ment fund shall not:
50 (i) Invest an amount in any single qualified enterprise that exceeds
51 fifty percent of the total investment from all other sources in any such
52 enterprise; or
53 (ii) Invest over five hundred thousand dollars in any individual
54 company, or seven hundred fifty thousand dollars in the case of any
55 individual biotechnology company, at any one time.
A. 6167--B 3
1 (b) A regional investment fund, before approving any application for
2 financial assistance under this section, shall find that:
3 (i) The qualified enterprise and its product or process have a reason-
4 able chance of being commercially successful;
5 (ii) The employment created or maintained as a result of the fund's
6 investment will be in New York state; and
7 (iii) Provisions are in place for the repayment of the funds if the
8 company receiving assistance leaves the state.
9 4. Regional investment fund reporting. The corporation shall require
10 any regional investment fund receiving investments under this section to
11 file a report with the corporation by December first, two thousand thir-
12 teen and annually thereafter. Such report shall include:
13 (a) The total amount of funds committed to the regional investment
14 fund and the amount that has been invested;
15 (b) The net asset value of the fund;
16 (c) The amount invested in each portfolio company from the fund and
17 from other sources;
18 (d) The type of product or technology being developed by each portfo-
19 lio company;
20 (e) The location of each portfolio company;
21 (f) The number of jobs projected to be created and retained; and
22 (g) Such other information as the corporation deems necessary.
23 5. Report of the corporation. The corporation shall submit to the
24 governor and the legislature a summary and evaluation of the reports
25 submitted to the corporation pursuant to subdivision four of this
26 section and an evaluation of the performance of the regional investment
27 funds on or before February first, two thousand fourteen and annually
28 thereafter.
29 6. Small business investment fund assets and liabilities. (a) All of
30 the assets and liabilities of the small business technology investment
31 fund established pursuant to appropriations made by various chapters of
32 the law including, but not limited to chapter fifty-three of the laws of
33 nineteen hundred eighty-one, chapter fifty-three of the laws of nineteen
34 hundred eighty-five, chapter fifty-three of the laws of nineteen hundred
35 eighty-six, chapter fifty-three of the laws of nineteen hundred eighty-
36 seven, chapter fifty-three of the laws of nineteen hundred eighty-eight,
37 chapter fifty-three of the laws of nineteen hundred eighty-nine, chapter
38 fifty-three of the laws of nineteen hundred ninety, chapter fifty-three
39 of the laws of nineteen hundred ninety-one, chapter fifty-three of the
40 laws of nineteen hundred ninety-two, chapter fifty-three of the laws of
41 nineteen hundred ninety-three, chapter fifty-three of the laws of nine-
42 teen hundred ninety-four, and chapter fifty-three of the laws of nine-
43 teen hundred ninety-five, shall be made available for the seed-NY
44 investment fund established pursuant to this section.
45 (b) The corporation shall prepare a plan, within ninety days following
46 the effective date of this section, to liquidate all current assets and
47 liabilities of the small business technology investment fund.
48 (c) The publicly-traded assets and any working capital shall be made
49 fully available to the seed-NY investment fund established pursuant to
50 this section.
51 (d) The corporation shall also take whatever actions are necessary to
52 liquidate the remaining assets of the small business technology invest-
53 ment fund as soon as practicable, but not more than two years following
54 the effective date of this section.
55 § 2. The governor, on or before June 27, 2012 and as part of the
56 state's application that will be submitted to the United States treasury
A. 6167--B 4
1 department to receive funding from the Federal Small Business Jobs Act
2 of 2010 (P.L. 11-240), shall allocate not less than $25,000,000 of New
3 York's portion of such federal moneys to the seed-NY investment fund for
4 the purpose of providing assistance to established regional investment
5 funds. Upon receipt of the federal moneys, the governor and the legisla-
6 ture shall immediately appropriate the amount allocated to the seed-NY
7 investment fund in the state's application to the New York state urban
8 development corporation for the purpose of carrying out the provisions
9 of section 46 of the New York state urban development corporation act.
10 § 3. This act shall take effect immediately.
