The Georgia Department of Community Affairs (DCA) has allocated $30 million of its SSBCI allocation for the Georgia Venture Capital Program. Funds will be transferred from DCA to Invest Georgia when committed, pledged, or otherwise promised, in writing, as part of an equity/venture capital investment transaction.
Invest Georgia and DCA will identify venture capital funds for potential investments that target business enterprises owned and controlled by socially and economically disadvantaged individuals (SEDI-owned businesses).
SSBCI programs target an average borrower size of 500 employees or less, but the business may not exceed 750 employees.
OPERATING MECHANICS OF THE GEORGIA VENTURE CAPITAL PROGRAM
- Invest Georgia is a contracted entity with the Georgia Department of Community Affairs and will operate the Georgia Venture Capital Program.
- The Georgia Venture Capital Program is a multi-fund program. A limited liability company created by Invest Georgia will invest directly as a limited partner in venture capital funds.
- Invest Georgia will target “seed” and “early stage” venture capital funds.
- Invest Georgia along with LCG Associates, Inc. will perform due diligence and select the venture capital funds to invest and will monitor investments. Each separate fund will manage the full processes of investing in high-potential Georgia-based small businesses.
- SSBCI capital will be legally obligated to venture capital funds as a limited partner through contractual agreements (subscription agreements) prior to these funds expending capital with investments in small businesses.
- The minimum investment amount will be $1,000,000 with a maximum investment amount of $3 million in private venture capital funds. At the discretion of DCA and Invest Georgia, investment amounts may be raised to no more than $5 million to invest in larger venture capital funds or special opportunities.
- A single financing from other investors cannot exceed $20 million. The $20 million restriction applies to a single investment round that includes an SSBCI-funded investment and all classes of equity investments that close on or about the same date.
- SSBCI equity investments must comply with the venture capital program conflict of interest standards as set forth in U.S. Treasury Guidelines. Funds from the SSBCI program cannot be used to make an investment in a business in which an SSBCI insider, or a family member or business partner of an SSBCI insider has a personal financial interest.
- SSBCI venture capital program investments may be used for most business purposes unless prohibited under U.S. Treasury Guidelines.
- Invest Georgia will take a seat on the Limited Partner Advisory Committee of each venture capital fund receiving a SSBCI investment.
- SSBCI capital investments will generally be limited to 10% of a venture capital fund.