john wahrgren - capital issues and business lifecycles
DESCRIPTION
John Wahrgren discusses capital, state benchmarks, and finance tools for emerging Oregon companiesTRANSCRIPT
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Oregon Business Plan - Capital Issues Benchmarking States Finance Tools
March 2010John Wahrgren
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Finance Tools Summary
Earlier-Stage
• Pre-seed Grants & Loans (royalty- forgivable)
• Direct Equity Seed/Venture Capital
• Fund-of-Funds Venture
• Tax Credit Incentives (R&D/Angel Investor)
• Metrics
Later-Stage• Revolving Loans• Loan Credit-
enhancements• Industrial
Development Revenue Bonds
• Tax Credit Incentives (Income/Property)
• Metrics
Note: Most states used public-private organizations as a means to deliver both earlier & later stage finance tools.
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State Finance Tools Lifecycle-Stage Continuum
TIME
Phase 0 Fund/Proof of Concept grants/Partner Connections
Grants /Loans - royalty payback
Angel Tax Incentive
Commercialization Competitions
State Venture Funds & Guarantees/Recruitment Incentives
State Loan & Loan Enhancement Funds
Angel/Grants Venture CapitalFriends/Family/Founders/Corporate Investors Equity Markets/Banks
Potential profitability
Business not fully
established
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“Comparable State” Selection Process
• 30* of 50 states are identified for comparable, best-practice /leadership potential.
• “State” includes finance tools provided by a public and/or public-private organization.
*Smaller Pop.: AZ/CO/CT/IN/IA/KS/KY/LA/MD/MA/MN/OK/OR/ SC/TN/UT/VA/WA/WI.
Larger Pop.: CA/FL/GA/IL/MI/NJ/NY/NC/OH/PA/TX.
Other: ME/NM.
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Early-Stage Tools Summary
• All 30 states offer some type of early-stage funds (grants, loans and/or equity).
• A few states provide direct equity, although more offer fund-of-funds venture.
• R&D tax credits (93% of states).
• Many offer Angel tax credits (63% of states).
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Later-Stage Tools Summary
• Most states offer tax incentives, and most provide revolving loans.
• All states offer IDBs, and all offer Brownfield reuse funds (tax credits- 37%).
• State (non-federal) funded NMTCs growing (20%).
• Loan credit enhancement (60%).
• Microenterprise loans (50%).
• Capital Access Program (30%).
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State Finance Tools Lifecycle-Stage Continuum
TIME
Phase 0 Fund/Proof of Concept grants/Partner Connections
Grants /Loans - royalty payback
Angel Tax Incentive
Commercialization Competitions
State Venture Funds & Guarantees/Recruitment Incentives
State Loan & Loan Enhancement Funds
Angel/Grants Venture CapitalFriends/Family/Founders/Corporate Investors Equity Markets/Banks
Potential profitability
Business not fully
established
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Policy Considerations: Early-Stage
• Increase outreach/marketing and state match amounts of SBIR/STTR grants.
• Encourage pre-seed/start-up gap funding: foundation grants, loans with royalty payback, corporate partners, and increase early-stage Angel investor incentives.
• Encourage networking – Angel/Venture.
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Policy Considerations: Early-Stage (continued)
• Expand Fund-of-Funds venture with state guarantee.
• Dedicate innovation funds.
• Provide direct equity investment.
Program Delivery Methods:• Quasi-public
organizational structure.• Communicate early-
stage policies & metrics.
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Policy Considerations: Later-Stage
Existing tools:• Retain tax credit incentives (e.g.
BETC, SIP, Enterprise Zones).• Recapitalize current tools (e.g.
OBDF).• Reinforce bond policy (e.g. IDB).New Tools:• State New Markets Tax Credit.• New credit enhancement tools
(e.g. Deposit Loan Program).• Brownfield-reuse tools (e.g.
Credits).
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Questions?
Next Steps:• Develop priority
actions and funding strategy.
• Design & implement metrics for all finance tools.
• Evaluate public-private structure and potential implementation barriers.
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You Are Invited! Portland Hilton - May 11-13,
2010