S6887 | Creates the seed-NY investment fund

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History

Feb 22, 2010 · SenateReferred to corporations, authorities and commissions

Companion bill

The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.

A9406Assembly

Creates the seed-NY investment fund

In Assembly Committee · Ways And Means · Sponsor Francine DelMonte

Full text

The text isn't available here yet. Check nysenate.gov.

Sponsor's memo

Title of bill

An act to amend the New York state urban development corporation act and the public authorities law, in relation to creating the seed-NY investment fund

Purpose or general idea of bill

Authorizes the urban development corporation/empire state development (ESD) to invest in regional equity funds to help finance the commercialization of new technologies.

Summary of specific provisions

A new investment fund is created within the urban development corporation/empire state that will make awards in regional equity funds providing seed capital for early stage commercialization of technologies. Criteria and procedures for the awards are established Funds will be competitively awarded to entities with a demonstrated record for making syndicated equity-based seed-stage investments. Individual investments would not exceed five hundred thousand dollars, or seven hundred fifty thousand dollars in the case of a biotechnology company, at anyone time and be matched by at least a one-to-one basis with funds other than state monies. Allocations to these companies would be in return for equity or debt securities or royalties. Due to the high risk involved and the economic development component attributed to these funds, the expected return on investment would be less than that which would be expected for a traditional venture capital fund in the private sector.

The corporation would require regional funds to file annual reports on the use of funds and is required to summarize and evaluate these reports for the legislature and the governor.

The assets of the the small business technology investment fund would be liquidated to help finance the new fund.

Effects of present law which this bill would alter

Chapter 174 of the laws of 1968 is amended by adding a new section 44 and the public authorities law is amended by adding a new section 3154-a.

Justification

There is a need for commercialization assistance in New York and regional entities, aware of the strengths and potentials in their own economies, are well-suited to determine how to optimize the effectiveness of these awards. State-sponsored research has supported the invention of numerous ideas and products that could greatly benefit society, but many of these inventions are never commercialized because New York universities, entrepreneurs at or associated with these universities, and many small business owners in New York State often do not have the resources or experience to develop their scientific discoveries.

Such assistance is frequently not available from market sources, such as venture capitalists and banks, at such an early stage of product development. A program of state assistance is needed to enable the successful commercialization of promising inventions and technologies.

This bill introduces the concept of "investing in investors" by enabling the corporation to decentralize its investment program. The State has many successful regional investment funds that can provide such assistance, which increases the chances of success of new ventures.

Prior legislative history

None.

Fiscal implications for state and local governments