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The Seed Capital Investment Program: Navigating the Arkansas Risk Capital Landscape

The Seed Capital Investment Program: Navigating the Arkansas Risk Capital Landscape. Seed Capital Investment Program Funding History. In 1985, SCIP investment fund was established as a Revolving Cash Fund with $1.8 million

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The Seed Capital Investment Program: Navigating the Arkansas Risk Capital Landscape

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  1. The Seed Capital Investment Program: Navigating the Arkansas Risk Capital Landscape

  2. Seed Capital Investment Program Funding History • In 1985, SCIP investment fund was established as a Revolving Cash Fund with $1.8 million • In 2005 the General Assembly and Governor supported an appropriation of $292,653/yr in General Revenue Funds (GRF) to the Authority for seed capital investments. • In 2010 the Governor released $700,000 in General Improvement Funds (GIF) to the Authority for investment in IA clients.

  3. Major Risk Capital and Investor Incentive Programs

  4. TTAGSBIRTDPR&DTCSCIPEITCRCMF

  5. NanoMech as a Case Study ARP* (1996) $ 30,200 ARMF* (1999) $ 254,043 TTAG (10 since 2002) $ 37,500 R&D TC (2004) $ 591,362 SCIP (2007-9) $ 500,000 EITC (2008) $ 249,983 RCMF (2010) $ 500,000 $ 2,163,088

  6. R&D S&E Sustain successful existing industry through advancing technology and competitiveness. NanoMech 2011 Develop risk capital that is available for all stages of the business cycle, especially the funding gap. Product Sales Workforce Encourage entrepreneurship and accelerated new enterprise development. Development Introductory Growth Maturity Decline Time Risk Capital Growth Entrepreneurship Sustain Successful Companies

  7. Seed Capital Investment Program Funding Available for Investment • Revolving Cash Fund $ 1,070,178.32 • General Revenue Fund $ 292,653.00 • General Revenue Fund $ 700,000.00

  8. Seed Capital Investment Program Investment Portfolio • Revolving Cash Fund $ 2,940,103.37 • General Revenue Fund $ 1,458,120.92 • General Revenue Fund $ 0.00

  9. Revolving Cash Fund Investments Art Exchange (01-SCIP-06) $ 288,146.35 Audio Access (98-SCIP-02) $ 84,284.74 Bentonville Int'l Group (09-SCIP-02) $ 88,000.03 ContourMed, LLC (06-SCIP-01) $ 391,046.60 EquityNet (10-SCIP-17) $ 49,203.15 Immigreat Now (09-SCIP-09) $ 50,000.00 Integral Wave Tech(01-SCIP-05) $ 470,491.30 IZON (06-SCIP-02) $ 226,550.17 Konaware (06-SCIP-03) $ 491,500.61 Merit Builder (09-SCIP-08 GR/SC) $ 7,347.00 NanoMech - Duralor (10-SCIP-16) $ 499,134.80 Prophet Line (99-SCIP-02) $ 50,796.19 Transparent Visibility (10-SCIP-20 GR/SC) $ 7,347.00 Unity Ware (09-SCIP-15) $ 42,650.00 Vision Technologies (00-SCIP-04) $ 193,605.43

  10. General Revenue Fund Investments Stage 1 Diagnostics (06-SCIP-04 SARs Inv.) $ 292,653.00 Accupal - MSTP (09-SCIP-03 GR) $ 99,131.34 Agri Research Init. (07-SCIP-17 GR) $ 93,994.00 Amer Defense Compon. (07-SCIP-01 GR) $ 97,551.00 AR Power Electronics (07-SCIP-02 GR) $ 97,551.00 Balm Innovations (09-SCIP-01 GR) $ 99,389.74 Infinite Energy LLC (08-SCIP-03) $ 97,551.00 Lynndale (08-SCIP-04 GR) $ 175,000.00 MeritBuilder (09-SCIP-08 GR/SC) $ 92,653.00 Silicon Solar Solutions (09-SCIP-13 GR) $ 200,000.00 Station X (08-SCIP-10 GR) $ 19,993.84 Transparent Visibility (10-SCIP-20 GR/SC) $ 92,653.00

  11. Evaluating Risk Capital Investments • Targeted Industries Match-Up • Economic Impact Potential • Market Feasibility • Technical Feasibility • Management Strength • Production Feasibility • Intellectual Property • Financial Health • SBIR/STTR Awards • Syndicate Financing • Level of Persistence • IA Involvement

  12. A Risk Capital “Formula” -Using Multiple Programs Simultaneous • An early-stage technology company is seeking to raise $1 million in risk capital. • Seed Capital Funds could provide $250,000 with a matching investment of $750,000. The $250,000 could be part of the match for Enterprise Development Funds. • Enterprise Development Funds could provide $200,000 with a matching investment of $800,000. The $200,000 could be part of the match for Seed Capital Funds. • [The matching funds at this point would be $450,000 ($250,000 plus $200,000).] • An Equity Investment Tax Credit of 33% could leverage a private investment for the remaining $550,000 and generate a $181,500 tax credit for the investor.

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