John Wahrgren - Capital Issues and Business Lifecycles

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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

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

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