Florida Senate - 2011                                    SB 1730
       By Senator Altman
       24-01320C-11                                          20111730__
    1                        A bill to be entitled                      
    2         An act relating to the Technology Seed Capital Fund;
    3         providing definitions; providing for the creation of
    4         the Technology Seed Capital Fund by the Institute for
    5         the Commercialization of Public Research; providing
    6         for the creation of a fund management committee by the
    7         board of directors of the institute; forbidding
    8         members of the committee from investing in a company
    9         for a specified period after an investment in a
   10         company is approved; specifying responsibilities of
   11         the institute and the fund management committee with
   12         respect to the fund; specifying the requirements for
   13         an investment management plan proposal from interested
   14         applicants for the investment manager position;
   15         specifying the authority of the investment manager for
   16         the fund; specifying qualifications for investments of
   17         the fund; requiring that proposed investments be
   18         matched by the private sector before the fund invests;
   19         requiring that the company be domiciled in the state
   20         and operate in one of the targeted industry clusters;
   21         requiring that the company have certain positions and
   22         abilities; limiting the amount of individual
   23         investments of the fund; requiring earnings from the
   24         fund to be reinvested; limiting the administrative
   25         costs of the fund; requiring the institute to submit
   26         an annual report to the Governor and Legislature
   27         relating to the activities of the fund; providing an
   28         appropriation; providing an effective date.
   30         WHEREAS, consistent access to significant risk capital at
   31  all stages of development is integral to the creation and growth
   32  of small technology companies, and the maturation of these
   33  companies into the leading companies of tomorrow will facilitate
   34  the diversification of Florida’s economy, and
   35         WHEREAS, young companies have little to no collateral with
   36  which to secure traditional loans and limited assets and track
   37  records with which to attract financing from private equity
   38  firms, and
   39         WHEREAS, this state is not the natural home of the venture
   40  capital industry, and as a result, companies in this state are
   41  severely disadvantaged in their efforts to attract venture
   42  capital investment, and
   43         WHEREAS, a lack of seed-stage funding exists in this state
   44  despite the fact that the leaders of this state have recognized
   45  the venture capital challenge and in recent years have taken
   46  significant action to help address it, in particular through the
   47  creation of the Florida Opportunity Fund and the Florida Growth
   48  Fund, and
   49         WHEREAS, to date very little capital is available to
   50  companies in this state in the crucial seed stage, and
   51         WHEREAS, the 2010-2015 Roadmap to Florida’s Future called
   52  for the creation of a new mechanism for seed-stage funding to
   53  address the state’s seed stage capital gap as part of a
   54  comprehensive strategy to promote high-tech, high-wage,
   55  innovation-driven growth, and
   56         WHEREAS, broad-based support exists among the state’s
   57  economic development, business, and academic leaders for the
   58  creation of a Florida Technology Seed Capital Fund, and
   59         WHEREAS, it is recommended that the state make a $25
   60  million investment to establish a Technology Seed Capital Fund,
   63  Be It Enacted by the Legislature of the State of Florida:
   65         Section 1. Technology Seed Capital Fund; creation; duties.—
   66         (1) DEFINITIONS.—As used in this section, the term:
   67         (a) “Fund” means the Technology Seed Capital Fund.
   68         (b) “Institute” means the Institute for the
   69  Commercialization of Public Research.
   71         (a) The institute shall facilitate the creation of the
   72  fund. This fund shall be a private, nonprofit corporation
   73  organized and operated under chapter 617, Florida Statutes. The
   74  institute shall be the fund’s sole shareholder or member. The
   75  fund is not a public corporation or instrumentality of the
   76  state. The fund shall manage its business affairs and conduct
   77  business consistent with its organizational documents and the
   78  purposes set forth in this section. Notwithstanding the powers
   79  granted under chapter 617, Florida Statutes, the fund may not
   80  amend, modify, or repeal a bylaw or article of incorporation
   81  without the express written consent of the institute.
   82         (b) The board of directors of the institute shall direct
   83  its venture advisory board to elect or appoint a five-person
   84  fund management committee. Members of the committee shall serve
   85  without compensation, but are entitled to reimbursement for all
   86  reasonable, necessary, and actual expenses authorized under s.
   87  112.061, Florida Statutes, and as determined and approved by the
   88  board of directors of the institute. Members of the committee
   89  may not invest in any company receiving funding from the fund
   90  for 6 months after an investment in the company by the fund is
   91  formally approved. The staff of the institute shall provide
   92  administrative support and assistance to the fund management
   93  committee upon request.
   95         (a) Upon organization, the fund management committee shall
   96  conduct a national solicitation for proposals for investment
   97  management plans from interested parties. The investment
   98  management plan must address the applicant’s level of
   99  experience, quality of management, investment philosophy and
  100  process, proof of success in fund management and fundraising,
  101  prior investment fund results, and plan for achieving the
  102  purposes of this section.
  103         (b) The fund management committee is responsible for
  104  negotiating the terms of the contract with an investment manager
  105  for the fund and for recommending the execution of the contract.
  106         (c) The fund management committee must consult with the
  107  board of directors of the institute before recommending the
  108  pursuit of any investment management plan proposal or the hiring
  109  of an investment manager for the fund.
  110         (4) RESPONSIBILITIES OF THE INSTITUTE.—The board of
  111  directors of the institute shall be responsible for managing the
  112  business affairs of the fund, such as accounting, audit,
  113  insurance, and related requirements; soliciting and negotiating
  114  the terms of, contracting for, and receiving investment capital
  115  and 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 seed capital to facilitate the creation of
  119  new businesses and jobs in this state and further diversify the
  120  economy of this state.
  121         (5) FUND MANAGER.—For the purpose of mobilizing investment
  122  in Florida-based, new technology companies and generating a
  123  return sufficient to continue reinvestment, the investment
  124  manager of the fund may:
  125         (a) Deploy the fund to make direct investments in
  126  individual businesses;
  127         (b) Negotiate any and all terms and conditions for
  128  investments of the fund;
  129         (c) Track progress of the companies in the fund’s
  130  portfolio; and
  131         (d) Increase the visibility of the companies in the fund’s
  132  portfolio to help raise additional capital from private or
  133  corporate sources.
  134         (6)INVESTMENTS BY THE FUND.—
  135         (a) The fund may not invest in a company unless:
  136         1.The fund’s proposed investment in a company is matched
  137  at least 1 to 1 by the private sector before the fund invests;
  138         2. The company is domiciled in this state and is operating
  139  in one of the state’s targeted industries as identified pursuant
  140  to s. 288.106(2), Florida Statutes, which include, but are not
  141  limited to, life sciences, information technology, energy, clean
  142  technology, advanced manufacturing processes, aviation and
  143  aerospace, and homeland security and defense; and
  144         3.The fund determines that the company has strong
  145  intellectual property positions, a capable management team,
  146  readily identifiable paths to market or commercialization, the
  147  ability to obtain other sources of capital to leverage the
  148  state’s investment, and the potential to attract additional or
  149  follow-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 fund
  153  to be reinvested consistent with the purposes of this act.
  154         (7) ADMINISTRATIVE COSTS OF THE FUND.—The annual
  155  administrative costs of the fund may not exceed 5 percent of the
  156  total program appropriation, except that the fund may pay its
  157  investment manager a carried interest.
  158         (8) ANNUAL REPORT.—By December 1 of each year, the
  159  institute shall issue an annual report concerning the
  160  investments of the fund to the Governor, the President of the
  161  Senate, and the Speaker of the House of Representatives. The
  162  annual report, at a minimum, must include:
  163         (a) An accounting of the amount of investments disbursed by
  164  the fund and the progress of the fund.
  165         (b) A description of the benefits to this state resulting
  166  from the fund, including the number of businesses created,
  167  additional capital raised, associated industries started, the
  168  number of jobs created, and the growth of related research
  169  projects.
  170         (c) Independently audited financial statements, including
  171  statements that show receipts and expenditures during the
  172  preceding fiscal year for the personnel, administration, and
  173  operational costs of the fund. Any returns on the investments of
  174  the fund shall be retained by the institute and reinvested in a
  175  manner consistent with the mandates of this section.
  176         Section 2. The sum of $25 million in nonrecurring funds
  177  from the General Revenue Fund is appropriated to the Institute
  178  for the Commercialization of Public Research solely for purposes
  179  of creating and administering the Technology Seed Capital Fund,
  180  pursuant to this act.
  181         Section 3. This act shall take effect July 1, 2011.