HB 1381

A bill to be entitled
2An act relating to the Technology Seed Capital Fund;
3providing definitions; providing for the creation of the
4Technology Seed Capital Fund by the Institute for the
5Commercialization of Public Research; providing for the
6creation of a fund management committee by the board of
7directors of the institute; forbidding members of the
8committee from investing in a company for a specified
9period after an investment in a company is approved;
10specifying responsibilities of the institute and the fund
11management committee with respect to the fund; specifying
12the requirements for an investment management plan
13proposal from interested applicants for the investment
14manager position; specifying the authority of the
15investment manager for the fund; specifying qualifications
16for investments of the fund; requiring that proposed
17investments be matched by the private sector before the
18fund invests; requiring that the company be domiciled in
19the state and operate in one of the targeted industry
20clusters; requiring that the company have certain
21positions and abilities; limiting the amount of individual
22investments of the fund; requiring earnings from the fund
23to be reinvested; limiting the administrative costs of the
24fund; requiring the institute to submit an annual report
25to the Governor and Legislature relating to the activities
26of the fund; providing an effective date.
28     WHEREAS, consistent access to significant risk capital at
29all stages of development is integral to the creation and growth
30of small technology companies, and the maturation of these
31companies into the leading companies of tomorrow will facilitate
32the diversification of Florida's economy, and
33     WHEREAS, young companies have little to no collateral with
34which to secure traditional loans and limited assets and track
35records with which to attract financing from private equity
36firms, and
37     WHEREAS, this state is not the natural home of the venture
38capital industry, and as a result, companies in this state are
39severely disadvantaged in their efforts to attract venture
40capital investment, and
41     WHEREAS, a lack of seed-stage funding exists in this state
42despite the fact that the leaders of this state have recognized
43the venture capital challenge and in recent years have taken
44significant action to help address it, in particular through the
45creation of the Florida Opportunity Fund and the Florida Growth
46Fund, and
47     WHEREAS, to date very little capital is available to
48companies in this state in the crucial seed stage, and
49     WHEREAS, the 2010-2015 Roadmap to Florida's Future called
50for the creation of a new mechanism for seed-stage funding to
51address the state's seed stage capital gap as part of a
52comprehensive strategy to promote high-tech, high-wage,
53innovation-driven growth, and
54     WHEREAS, broad-based support exists among the state's
55economic development, business, and academic leaders for the
56creation of a Florida Technology Seed Capital Fund, and
57     WHEREAS, it is recommended that the state make a $25
58million investment to establish a Technology Seed Capital Fund,
61Be It Enacted by the Legislature of the State of Florida:
63     Section 1.  Technology Seed Capital Fund; creation;
65     (1)  DEFINITIONS.-As used in this section, the term:
66     (a)  "Fund" means the Technology Seed Capital Fund.
67     (b)  "Institute" means the Institute for the
68Commercialization of Public Research.
70     (a)  Subject to legislative appropriations, the institute
71shall facilitate the creation of the fund. This fund shall be a
72private, nonprofit corporation organized and operated under
73chapter 617, Florida Statutes. The institute shall be the fund's
74sole shareholder or member. The fund is not a public corporation
75or instrumentality of the state. The fund shall manage its
76business affairs and conduct business consistent with its
77organizational documents and the purposes set forth in this
78section. Notwithstanding the powers granted under chapter 617,
79Florida Statutes, the fund may not amend, modify, or repeal a
80bylaw or article of incorporation without the express written
81consent of the institute.
82     (b)  The board of directors of the institute shall direct
83its venture advisory board to elect or appoint a five-person
84fund management committee. Members of the committee shall serve
85without compensation, but are entitled to reimbursement for all
86reasonable, necessary, and actual expenses authorized under s.
87112.061, Florida Statutes, and as determined and approved by the
88board of directors of the institute. Members of the committee
89may not invest in any company receiving funding from the fund
90for 6 months after an investment in the company by the fund is
91formally approved. The staff of the institute shall provide
92administrative support and assistance to the fund management
93committee upon request.
95     (a)  Upon organization, the fund management committee shall
96conduct a national solicitation for proposals for investment
97management plans from interested parties. The investment
98management plan must address the applicant's level of
99experience, quality of management, investment philosophy and
100process, proof of success in fund management and fundraising,
101prior investment fund results, and plan for achieving the
102purposes of this section.
103     (b)  The fund management committee is responsible for
104negotiating the terms of the contract with an investment manager
105for the fund and for recommending the execution of the contract.
106     (c)  The fund management committee must consult with the
107board of directors of the institute before recommending the
108pursuit of any investment management plan proposal or the hiring
109of an investment manager for the fund.
111directors of the institute shall be responsible for managing the
112business affairs of the fund, such as accounting, audit,
113insurance, and related requirements; soliciting and negotiating
114the terms of, contracting for, and receiving investment capital
115and proceeds with the assistance of the investment manager;
116receiving investment returns; paying investors and debtors; and
117reinvesting the investment returns in the fund in order to
118provide additional seed capital to facilitate the creation of
119new businesses and jobs in this state and further diversify the
120economy of this state.
121     (5)  FUND MANAGER.-For the purpose of mobilizing investment
122in Florida-based, new technology companies and generating a
123return sufficient to continue reinvestment, the investment
124manager of the fund may:
125     (a)  Deploy the fund to make direct investments in
126individual businesses;
127     (b)  Negotiate any and all terms and conditions for
128investments of the fund;
129     (c)  Track progress of the companies in the fund's
130portfolio; and
131     (d)  Increase the visibility of the companies in the fund's
132portfolio to help raise additional capital from private or
133corporate sources.
135     (a)  The fund may not invest in a company unless:
136     1.  The fund's proposed investment in a company is matched
137at least 1 to 1 by the private sector before the fund invests;
138     2.  The company is domiciled in this state and is operating
139in one of the state's targeted industries as identified pursuant
140to s. 288.106(2), Florida Statutes, which include, but are not
141limited to, life sciences, information technology, energy, clean
142technology, advanced manufacturing processes, aviation and
143aerospace, and homeland security and defense; and
144     3.  The fund determines that the company has strong
145intellectual property positions, a capable management team,
146readily identifiable paths to market or commercialization, the
147ability to obtain other sources of capital to leverage the
148state's investment, and the potential to attract additional or
149follow-on funding.
150     (b)  Individual seed investments by the fund may range from
151$30,000 to $300,000.
152     (c)  Any earnings from the fund must be returned to the
153fund to be reinvested consistent with the purposes of this act.
155administrative costs of the fund may not exceed 5 percent of the
156total program appropriation, except that the fund may pay its
157investment manager a carried interest.
158     (8)  ANNUAL REPORT.-By December 1 of each year, the
159institute shall issue an annual report concerning the
160investments of the fund to the Governor, the President of the
161Senate, and the Speaker of the House of Representatives. The
162annual report, at a minimum, must include:
163     (a)  An accounting of the amount of investments disbursed
164by the fund and the progress of the fund.
165     (b)  A description of the benefits to this state resulting
166from the fund, including the number of businesses created,
167additional capital raised, associated industries started, the
168number of jobs created, and the growth of related research
170     (c)  Independently audited financial statements, including
171statements that show receipts and expenditures during the
172preceding fiscal year for the personnel, administration, and
173operational costs of the fund. Any returns on the investments of
174the fund shall be retained by the institute and reinvested in a
175manner consistent with the mandates of this section.
176     Section 2.  This act shall take effect July 1, 2011.

CODING: Words stricken are deletions; words underlined are additions.