| 1 | A bill to be entitled |
| 2 | An act relating to venture capital funds; creating s. |
| 3 | 288.9621, F.S.; providing a short title; creating s. |
| 4 | 288.9622, F.S.; providing legislative findings and intent; |
| 5 | creating s. 288.9623, F.S.; providing definitions; |
| 6 | creating s. 288.9624, F.S.; requiring Enterprise Florida, |
| 7 | Inc., to facilitate creation of the Florida Opportunity |
| 8 | Fund; specifying criteria of the fund; providing for |
| 9 | appointment of an appointment committee; providing for |
| 10 | selection of a board of directors of the fund by |
| 11 | Enterprise Florida, Inc.; specifying criteria; providing |
| 12 | for terms and requirements of the directors; providing |
| 13 | purposes of the fund; providing duties and |
| 14 | responsibilities of the fund; authorizing the fund to |
| 15 | negotiate all contract terms; providing for reimbursement |
| 16 | for travel and other direct expenses; providing for powers |
| 17 | of the fund; providing investment requirements for the |
| 18 | fund; requiring the board of directors to issue an annual |
| 19 | report on the activities of the fund; providing report |
| 20 | requirements; providing an appropriation; providing an |
| 21 | effective date. |
| 22 |
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| 23 | Be It Enacted by the Legislature of the State of Florida: |
| 24 |
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| 25 | Section 1. Sections 288.9621, 288.9622, 288.9623, and |
| 26 | 288.9624, Florida Statutes, are created to read: |
| 27 | 288.9621 Short title.--Sections 288.9621-288.9624 may be |
| 28 | cited as the "Florida Capital Formation Act." |
| 29 | 288.9622 Findings and intent.-- |
| 30 | (1) The Legislature finds and declares that there is a |
| 31 | need to increase the availability of seed capital and early |
| 32 | stage venture equity capital for emerging companies in the |
| 33 | state, including, without limitation, enterprises in life |
| 34 | sciences, information technology, advanced manufacturing |
| 35 | processes, aviation and aerospace, and homeland security and |
| 36 | defense, as well as other strategic technologies. |
| 37 | (2) It is the intent of the Legislature that this act |
| 38 | serve to mobilize private investment in a broad variety of |
| 39 | venture capital partnerships in diversified industries and |
| 40 | geographies; retain private-sector investment criteria focused |
| 41 | on rate of return; use the services of highly qualified managers |
| 42 | in the venture capital industry regardless of location; |
| 43 | facilitate the organization of the Florida Opportunity Fund as a |
| 44 | fund-of-funds investor in seed and early stage venture capital |
| 45 | and angel funds; and precipitate capital investment and |
| 46 | extensions of credit to and in the Florida Opportunity Fund. |
| 47 | (3) It is the intent of the Legislature to mobilize |
| 48 | venture equity capital for investment in such a manner as to |
| 49 | result in a significant potential to create new businesses and |
| 50 | jobs in this state that are based on high growth potential |
| 51 | technologies, products, or services and that will further |
| 52 | diversify the economy of this state. |
| 53 | 288.9623 Definitions.--As used in ss. 288.9621-288.9624: |
| 54 | (1) "Board" means the board of directors of the Florida |
| 55 | Opportunity Fund. |
| 56 | (2) "Fund" means the Florida Opportunity Fund. |
| 57 | 288.9624 Florida Opportunity Fund; creation; duties.-- |
| 58 | (1)(a) Enterprise Florida, Inc., shall facilitate the |
| 59 | creation of the Florida Opportunity Fund, a private, not-for- |
| 60 | profit corporation organized and operated under chapter 617. |
| 61 | Enterprise Florida, Inc., shall be the fund's sole shareholder |
| 62 | or member. The fund is not a public corporation or |
| 63 | instrumentality of the state. The fund shall manage its business |
| 64 | affairs and conduct business consistent with its organizational |
| 65 | documents and the purposes set forth in this section. |
| 66 | Notwithstanding the powers granted under chapter 617, the |
| 67 | corporation may not amend, modify, or repeal a bylaw or article |
| 68 | of incorporation without the express written consent of |
| 69 | Enterprise Florida, Inc. |
| 70 | (b) The vice chair of Enterprise Florida, Inc., shall |
| 71 | select from among its sitting board of directors a five-person |
| 72 | appointment committee. The appointment committee shall select |
| 73 | five initial members of a board of directors for the fund. |
| 74 | (c) The persons elected to the initial board of directors |
| 75 | by the appointment committee shall include persons who have |
| 76 | expertise in the area of the selection and supervision of early |
| 77 | stage investment managers or in the fiduciary management of |
| 78 | investment funds and other areas of expertise as considered |
| 79 | appropriate by the appointment committee. |
| 80 | (d) After election of the initial board of directors, |
| 81 | vacancies on the board shall be filled by vote of the board of |
| 82 | directors of Enterprise Florida, Inc., and board members shall |
| 83 | serve terms as provided in the fund's organizational documents. |
| 84 | (e) Members of the board are subject to any restrictions |
| 85 | on conflicts of interest specified in the organizational |
| 86 | documents and may not have an interest in any venture capital |
| 87 | investment selected by the fund under ss. 288.9621-288.9624. |
| 88 | (f) Members of the board shall serve without compensation, |
| 89 | but members, the president of the board, and other board |
| 90 | employees may be reimbursed for all reasonable, necessary, and |
| 91 | actual expenses as determined and approved by the board pursuant |
| 92 | to s. 112.061. |
| 93 | (g) The fund shall have all powers granted under its |
| 94 | organizational documents and shall indemnify members to the |
| 95 | broadest extent permissible under the laws of this state. |
| 96 | (2) Upon organization, the board shall conduct a national |
| 97 | solicitation for investment plan proposals from qualified |
| 98 | venture capital investment managers for the raising and |
| 99 | investing of capital by the Florida Opportunity Fund. Any |
| 100 | proposed investment plan must address the applicant's level of |
| 101 | experience, quality of management, investment philosophy and |
| 102 | process, provability of success in fundraising, prior investment |
| 103 | fund results, and plan for achieving the purposes of this act. |
| 104 | The board shall select only venture capital investment managers |
| 105 | having demonstrated expertise in the management of and |
| 106 | investment in companies. |
| 107 | (3) The board is responsible for negotiating the terms of |
| 108 | a contract with the Florida Opportunity Fund investment manager; |
| 109 | executing the contract with the selected venture capital |
| 110 | investment fund manager on behalf of the Florida Opportunity |
| 111 | Fund; managing the business affairs of the Florida Opportunity |
| 112 | Fund, such as accounting, audit, insurance, and related |
| 113 | requirements; soliciting and negotiating the terms of, |
| 114 | contracting for, and receiving investment capital and loan |
| 115 | proceeds with the assistance of the investment manager; |
| 116 | receiving investment returns; paying investors and debtors; and |
| 117 | reinvesting the investment returns in the fund in order to |
| 118 | provide additional venture capital investments designed to |
| 119 | result in a significant potential to create new businesses and |
| 120 | jobs in this state and further diversify the economy of this |
| 121 | state. |
| 122 | (4) For the purpose of mobilizing investment in a broad |
| 123 | variety of Florida-based, new technology companies and |
| 124 | generating a return sufficient to continue reinvestment, the |
| 125 | fund shall: |
| 126 | (a) Invest directly only in seed and early stage venture |
| 127 | capital funds that have experienced managers or management teams |
| 128 | with demonstrated experience, expertise, and a successful |
| 129 | history in the investment of venture capital funds, focusing on |
| 130 | opportunities in this state. The fund may not make direct |
| 131 | investments in individual businesses. While not precluded from |
| 132 | investing in venture capital funds that have investments outside |
| 133 | this state, the fund must require a venture capital fund to show |
| 134 | a record of successful investment in this state, to be based in |
| 135 | this state, or to have an office in this state staffed with a |
| 136 | full-time, professional venture investment executive in order to |
| 137 | be eligible for investment. |
| 138 | (b) Negotiate for investment capital or loan proceeds from |
| 139 | private, institutional, or banking sources. |
| 140 | (c) Negotiate any and all terms and conditions for its |
| 141 | investments. |
| 142 | (d) Invest only in funds that have raised capital from |
| 143 | other sources so that the amount invested in an entity in this |
| 144 | state is at least twice the amount invested by the fund. |
| 145 | (5) By December 1 of each year, the board shall issue an |
| 146 | annual report concerning the activities conducted by the fund to |
| 147 | the Governor, the President of the Senate, and the Speaker of |
| 148 | the House of Representatives. The annual report, at a minimum, |
| 149 | must include: |
| 150 | (a) An accounting of the amount of investments disbursed |
| 151 | by the fund and the progress of the fund. |
| 152 | (b) A description of the benefits to this state resulting |
| 153 | from the fund, including the number of businesses created, |
| 154 | associated industries started, the number of jobs created, and |
| 155 | the growth of related research projects. |
| 156 | (c) Independently audited financial statements, including |
| 157 | statements that show receipts and expenditures during the |
| 158 | preceding fiscal year for personnel, administration, and |
| 159 | operational costs of the fund. |
| 160 | Section 2. The nonrecurring sum of $30 million is |
| 161 | appropriated from the General Revenue Fund to Enterprise |
| 162 | Florida, Inc., for the Florida Opportunity Fund for the 2007- |
| 163 | 2008 fiscal year. Of these funds, $500,000 shall be for the |
| 164 | purpose of initiating activities necessary to implement the |
| 165 | fund's responsibilities under this act, and $29.5 million is |
| 166 | provided for the purpose of making investments under s. |
| 167 | 288.9624, Florida Statutes. |
| 168 | Section 3. This act shall take effect July 1, 2007. |