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John Wahrgren - Capital Issues and Business Lifecycles
 

John Wahrgren - Capital Issues and Business Lifecycles

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John Wahrgren discusses capital, state benchmarks, and finance tools for emerging Oregon companies

John Wahrgren discusses capital, state benchmarks, and finance tools for emerging Oregon companies

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  • “Most comparable”: Connecticut, Georgia, Illinois, Maryland, Massachusetts, New Jersey, New York, Pennsylvania and Virginia.

John Wahrgren - Capital Issues and Business Lifecycles John Wahrgren - Capital Issues and Business Lifecycles Presentation Transcript

  • Oregon Business Plan - Capital Issues Benchmarking States Finance Tools
    March 2010
    John Wahrgren
  • 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.
  • State Finance Tools Lifecycle-Stage Continuum
    Phase 0 Fund/Proof of Concept grants/Partner Connections
    Grants /Loans - royalty payback
    Angel Tax Incentive
    Commercialization Competitions
    Potential profitability
    State Venture Funds & Guarantees/Recruitment Incentives
    State Loan & Loan Enhancement Funds
    Angel/Grants
    Venture Capital
    Friends/Family/Founders/Corporate Investors
    Equity Markets/Banks
    Business not fully established
    TIME
    • 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.
    “Comparable State” Selection Process
  • 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).
  • 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%).
  • State Finance Tools Lifecycle-Stage Continuum
    Phase 0 Fund/Proof of Concept grants/Partner Connections
    Grants /Loans - royalty payback
    Angel Tax Incentive
    Commercialization Competitions
    Potential profitability
    State Venture Funds & Guarantees/Recruitment Incentives
    State Loan & Loan Enhancement Funds
    Angel/Grants
    Venture Capital
    Friends/Family/Founders/Corporate Investors
    Equity Markets/Banks
    Business not fully established
    TIME
    • 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.
    Policy Considerations: Early-Stage
    • 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.
    Policy Considerations: Early-Stage (continued)
  • 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).
  • Questions?
    Next Steps:
    • Develop priority actions and funding strategy.
    • Design & implement metrics for all finance tools.
    • Evaluate public-private structure and potential implementation barriers.
  • You Are Invited! Portland Hilton - May 11-13, 2010