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Information and Observations on State Venture Capital Programs

Author: Cromwell Schmisseur LLC
Date: February 2013

As the chief steward of U.S. economic policy, the U.S. Department of the Treasury manages a large portfolio of programs and fiscal policies intended to strengthen the U.S. economy and promote the conditions for stable economic growth by creating jobs and economic opportunities. Within this portfolio resides a new initiative for fostering innovation and job creation through a federal-state partnership that stimulates and leverages private sector investment in high-potential small businesses – “state venture capital programs” within the State Small Business Credit Initiative (SSBCI).

Congress created and President Obama signed into law the Small Business Jobs Act of 2010, which includes the $1.5 billion SSBCI, a credit support program established to address concerns that small businesses were having greater difficulty accessing financial capital in current economic conditions. An analysis of financial support programs at the federal level indicates SSBCI is unique as a federal program that provides funding and assistance for state-managed venture capital investment programs.

An important feature of SSBCI is the flexibility allowed by the Act and Treasury administrators for state program managers to assess market needs in their respective states and design customized program structures, including an opportunity to invest allocated capital in existing or new state venture capital programs. As such, SSBI empowers states to play an important role as “laboratories of innovation” for designing effective programs.

Geography: US

Type of study: Consulting research

Relevant for: LP, VC, Fund of funds, Associate

Source: US Department of Treasury