senate Bill S1750

2013-2014 Legislative Session

Creates the seed-NY investment fund

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to corporations, authorities and commissions
Jan 09, 2013 referred to corporations, authorities and commissions

S1750 - Bill Details

Current Committee:
Law Section:
New York State Urban Development Corporation Act
Laws Affected:
Add §46, UDC Act; add §3154-a, Pub Auth L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S1864
2009-2010: S6887

S1750 - Bill Texts

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Creates the seed-NY investment fund; authorizes the transfer of all assets and liabilities of the small business technology investment fund for the Seed-NY investment fund.

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BILL NUMBER:S1750

TITLE OF BILL:
An act
to amend the New York state urban development corporation act and
the public authorities law, in relation to creating the seed-NY
investment fund

PURPOSE OR GENERAL IDEA OF BILL:
Authorizes the urban development corporation/empire state development
(ESD) to invest in regional equity funds to help finance the
commercialization of new technologies.

SUMMARY OF SPECIFIC PROVISIONS:
A new investment fund is created within the urban development
corporation/empire state that win make awards in regional equity
funds providing seed capital for early stage commercialization of
technologies. criteria and procedures for the awards are established
Funds will be competitively awarded to entities with a demonstrated
record for making syndicated equity-based seed-stage investments.
Individual investments would not exceed five hundred thousand
dollars, or seven hundred fifty thousand dollars in the case of a
biotechnology company, at anyone time and be matched by at least a
one-to-one basis with funds other than state monies. Allocations to
these companies would be in return for equity or debt securities or
royalties. Due to the high risk involved and the economic development
component attributed to these funds, the expected return on
investment would be less than that which would be expected for a
traditional venture capital fund in the private sector.

The corporation would require regional funds to file annual reports on
the use of funds and is required to summarize and evaluate these
reports fox the legislature and the governor.

The assets of the the small business technology investment fund would
be liquidated to help finance the new fund.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER:
Chapter 174 of the laws of 1568 is amended by adding a new section 44
and the public authorities law is amended by adding a new section
3154-a.

JUSTIFICATION:
There is a need for commercialization assistance in New York and
regional entities, aware-of the strengths and potentials in their own
economies, are well-suited to determine how to optimize the
effectiveness of these awards. state-sponsored research has supported
the invention of numerous ideas and products that could greatly
benefit society, but many of these inventions are never.
commercialized because New York universities, entrepreneurs at or
associated with these universities, and many small business owners in
New York State often do not have the resources or experience to
develop their scientific discoveries.

Such assistance is frequently not available from market sources, such
as venture capitalists and banks, at such an early stage of product


development. A program of state assistance is needed to enable the
successful commercialization of promising inventions and
technologies. This bill introduces the concept of "investing in
investors" by enabling the corporation to decentralize its investment
program. The State has many successful regional investment funds that
can provide such assistance, which increases the chances of success
of new ventures.

PRIOR LEGISLATIVE HISTORY: None.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None

EFFECTIVE DATE: Immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  1750

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced by Sen. ESPAILLAT -- read twice and ordered printed, and when
  printed  to be committed to the Committee on Corporations, Authorities
  and Commissions

AN ACT to amend the New York state urban development corporation act and
  the public authorities  law,  in  relation  to  creating  the  seed-NY
  investment fund

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 1 of chapter 174 of the laws of 1968,  constituting
the  New  York  state  urban  development corporation act, is amended by
adding a new section 46 to read as follows:
  S 46. THE SEED-NY INVESTMENT FUND. 1. DEFINITIONS. FOR THE PURPOSES OF
THIS SECTION, THE FOLLOWING WORDS AND TERMS  SHALL  HAVE  THE  FOLLOWING
MEANINGS  UNLESS THE CONTEXT SHALL INDICATE ANOTHER OR DIFFERENT MEANING
OR INTENT:
  (A) "REGIONAL INVESTMENT  FUND"  SHALL  MEAN  A  LIMITED  PARTNERSHIP,
LIMITED   LIABILITY  PARTNERSHIP,  A  LIMITED  LIABILITY  COMPANY  OR  A
NOT-FOR-PROFIT FUND UNDER EXPERIENCED PROFESSIONAL  MANAGEMENT  THAT  IS
FAMILIAR  WITH  SEED  CAPITAL INVESTMENT, APPROPRIATE BUSINESS PRACTICES
AND TECHNOLOGY-ORIENTED  PRODUCTS  AND  SERVICES,  AND  FORMED  FOR  THE
PURPOSE  OF  PROVIDING  PRIVATE  EQUITY TO TECHNOLOGY-BASED COMPANIES IN
THEIR FORMATIVE STAGES, ENCOMPASSES AT LEAST TWO COUNTIES,  AND  INVESTS
IN QUALIFIED ENTERPRISES LOCATED WITHIN NEW YORK STATE.
  (B) "QUALIFIED ENTERPRISE" SHALL MEAN:
  (I)  A COMPANY OR A PROPOSED COMPANY THAT HAS OR WILL LOCATE ITS PRIN-
CIPAL PLACE OF BUSINESS IN NEW YORK STATE, THAT IS, OR PROPOSES  TO  BE,
ENGAGED  IN  THIS  STATE  IN RESEARCH AND DEVELOPMENT OR HIGH TECHNOLOGY
MANUFACTURING, AND  THAT  DEMONSTRATES  THE  POTENTIAL  FOR  SUBSTANTIAL
GROWTH AND JOB DEVELOPMENT IN AN EMERGING TECHNOLOGY FIELD AS DEFINED IN

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02618-01-3

S. 1750                             2

SECTION 3102-E OF THE PUBLIC AUTHORITIES LAW OR AS ADOPTED BY THE BOARD;
AND
  (II)  IS FORMULATING, HAS FORMULATED, OR IS EXECUTING A DETAILED BUSI-
NESS PLAN FOR PROOF-OF-CONCEPT OR INITIAL PRODUCT COMMERCIALIZATION.
  (C) "SEED CAPITAL" SHALL MEAN  FINANCIAL  ASSISTANCE  TO  A  QUALIFIED
ENTERPRISE, IN RETURN FOR EQUITY OR DEBT SECURITIES OR ROYALTIES.
  2. INVESTMENTS IN REGIONAL INVESTMENT FUNDS. (A) THE CORPORATION SHALL
MAKE  INVESTMENTS  TO ENCOURAGE AND FACILITATE THE CREATION OR EXPANSION
OF REGIONAL INVESTMENT FUNDS THAT SERVE THE PURPOSES  OF  THIS  SECTION.
THE  BOARD  OF  DIRECTORS  SHALL ADOPT CRITERIA AND GUIDELINES GOVERNING
SUCH INVESTMENTS, WHICH SHALL REQUIRE THAT:
  (I) THERE EXISTS A NEED FOR SEED CAPITAL IN THE REGION SERVED OR TO BE
SERVED BY A REGIONAL INVESTMENT FUND;
  (II) SUPPORT FOR A REGIONAL INVESTMENT FUND EXISTS FROM LOCAL  GOVERN-
MENTS,  ECONOMIC  DEVELOPMENT  AGENCIES, AND BUSINESS COMMUNITIES WITHIN
THE REGION OR AREA TO BE SERVICED BY SUCH FUND;
  (III) THE REGIONAL INVESTMENT FUND HAS THE  CAPACITY  TO  PERFORM  DUE
DILIGENCE  IN  MAKING  INVESTMENT  DECISIONS,  AND TO PROVIDE MANAGEMENT
EXPERTISE AND OTHER VALUE-ADDED  SERVICES  TO  ITS  PORTFOLIO  COMPANIES
WHICH  SERVICES MAY INCLUDE ACCESS TO CAPITAL, BUSINESS EXPERTISE, TECH-
NOLOGY COMMERCIALIZATION SERVICES AND A NETWORK OF RESOURCES IN ORDER TO
ADVANCE THE DEVELOPMENT OF NEW TECHNOLOGIES;
  (IV) THE REGIONAL  INVESTMENT  FUND  ESTABLISHES  CONFLICT-OF-INTEREST
PROVISIONS ACCEPTABLE TO THE CORPORATION;
  (V)  TO THE MAXIMUM EXTENT FEASIBLE, THE REGIONAL INVESTMENT FUND WILL
INVEST IN FIRMS WHICH HAVE THE GREATEST POTENTIAL FOR JOB CREATION;
  (VI) INVESTMENTS MADE BY THE CORPORATION IN A REGIONAL INVESTMENT FUND
SHALL NOT EXCEED FIVE MILLION DOLLARS  AND,  SHALL  BE  MATCHED  BY  THE
REGIONAL  FUND  ON  AT  LEAST A ONE-TO-ONE BASIS WITH MONIES, OTHER THAN
STATE MONIES, UNLESS THE BOARD FINDS THAT A REDUCED MATCHING REQUIREMENT
WILL FURTHER THE PURPOSES OF THIS SECTION; AND
  (VII) INVESTMENTS MADE BY A  REGIONAL  INVESTMENT  FUND  THAT  INCLUDE
FUNDS RECEIVED FROM THE CORPORATION SHALL BE MADE ONLY FOR THE FINANCING
AUTHORIZED BY SUBDIVISION 3 OF THIS SECTION.
  (B)  (I)  THE CORPORATION SHALL MAKE INVESTMENTS IN QUALIFIED REGIONAL
INVESTMENT FUNDS VIA THE ISSUANCE OF A REQUEST FOR PROPOSALS TO REGIONAL
AND LOCAL ECONOMIC  DEVELOPMENT  ORGANIZATIONS,  TECHNOLOGY  DEVELOPMENT
ORGANIZATIONS,  RESEARCH UNIVERSITIES, AND INVESTMENT FUNDS THAT PROVIDE
SMALL-SCALE INVESTMENTS IN HIGH-TECHNOLOGY COMPANIES IN NEW YORK STATE.
  (II) IN AWARDING FUNDS PURSUANT TO THIS SUBDIVISION,  THE  CORPORATION
SHALL ASSURE ADEQUATE GEOGRAPHIC DISTRIBUTION TO THE EXTENT FEASIBLE.
  3.  REGIONAL INVESTMENT FUNDS. (A) REGIONAL INVESTMENT FUNDS RECEIVING
INVESTMENTS FROM THE CORPORATION UNDER THIS ACT SHALL USE SUCH FUNDS AND
THE REQUIRED MATCHING  FUNDS  TO  PROVIDE  SEED  CAPITAL  AND  FOLLOW-ON
FINANCING  TO  QUALIFIED ENTERPRISES, PROVIDED THAT THE REGIONAL INVEST-
MENT FUND SHALL NOT:
  (I) INVEST AN AMOUNT IN ANY SINGLE QUALIFIED ENTERPRISE  THAT  EXCEEDS
FIFTY PERCENT OF THE TOTAL INVESTMENT FROM ALL OTHER SOURCES IN ANY SUCH
ENTERPRISE; OR
  (II)  INVEST OVER FIVE HUNDRED THOUSAND DOLLARS IN ANY ONE COMPANY, OR
SEVEN HUNDRED FIFTY THOUSAND DOLLARS IN  THE  CASE  OF  A  BIOTECHNOLOGY
COMPANY, AT ANY ONE TIME.
  (B)  A  REGIONAL INVESTMENT FUND, BEFORE APPROVING ANY APPLICATION FOR
FINANCIAL ASSISTANCE UNDER THIS SECTION, SHALL FIND THAT:
  (I) THE QUALIFIED ENTERPRISE AND ITS PRODUCT OR PROCESS HAVE A REASON-
ABLE CHANCE OF BEING COMMERCIALLY SUCCESSFUL;

S. 1750                             3

  (II) THE EMPLOYMENT CREATED OR MAINTAINED AS A RESULT  OF  THE  FUND'S
INVESTMENT WILL BE IN NEW YORK STATE; AND
  (III)  PROVISIONS  ARE  IN PLACE FOR THE REPAYMENT OF THE FUNDS IF THE
COMPANY RECEIVING ASSISTANCE LEAVES THE STATE.
  4. REGIONAL INVESTMENT FUND REPORTING. THE CORPORATION  SHALL  REQUIRE
ANY REGIONAL INVESTMENT FUND RECEIVING INVESTMENTS UNDER THIS SECTION TO
FILE  A  REPORT  WITH  THE  CORPORATION BY DECEMBER 1, 2014 AND ANNUALLY
THEREAFTER.  SUCH REPORT SHALL INCLUDE:
  (A) THE TOTAL AMOUNT OF FUNDS COMMITTED  TO  THE  REGIONAL  INVESTMENT
FUND AND THE AMOUNT THAT HAS BEEN INVESTED;
  (B) THE NET ASSET VALUE OF THE FUND;
  (C)  THE  AMOUNT  INVESTED IN EACH PORTFOLIO COMPANY FROM THE FUND AND
FROM OTHER SOURCES;
  (D) THE TYPE OF PRODUCT OR TECHNOLOGY BEING DEVELOPED BY EACH  PORTFO-
LIO COMPANY;
  (E) THE LOCATION OF EACH PORTFOLIO COMPANY;
  (F) THE NUMBER OF JOBS PROJECTED TO BE CREATED AND RETAINED; AND
  (G) SUCH OTHER INFORMATION AS THE CORPORATION DEEMS NECESSARY.
  5.  REPORT  OF  THE  CORPORATION.  THE CORPORATION SHALL SUBMIT TO THE
GOVERNOR AND THE LEGISLATURE A SUMMARY AND  EVALUATION  OF  THE  REPORTS
SUBMITTED  TO  THE CORPORATION PURSUANT TO SUBDIVISION 4 OF THIS SECTION
AND AN EVALUATION OF THE PERFORMANCE OF THE REGIONAL INVESTMENT FUNDS ON
OR BEFORE FEBRUARY 1, 2015 AND ANNUALLY THEREAFTER.
  S 2. The public authorities law is amended by  adding  a  new  section
3154-a to read as follows:
  S  3154-A.  SMALL BUSINESS INVESTMENT FUND ASSETS AND LIABILITIES.  1.
ALL OF THE ASSETS AND  LIABILITIES  OF  THE  SMALL  BUSINESS  TECHNOLOGY
INVESTMENT  FUND  ESTABLISHED PURSUANT TO APPROPRIATIONS MADE BY VARIOUS
CHAPTERS OF THE LAW INCLUDING, BUT NOT LIMITED TO CHAPTER FIFTY-THREE OF
THE LAWS OF NINETEEN HUNDRED EIGHTY-ONE, CHAPTER FIFTY-THREE OF THE LAWS
OF NINETEEN HUNDRED EIGHTY-FIVE, CHAPTER  FIFTY-THREE  OF  THE  LAWS  OF
NINETEEN HUNDRED EIGHTY-SIX, CHAPTER FIFTY-THREE OF THE LAWS OF NINETEEN
HUNDRED  EIGHTY-SEVEN,  CHAPTER  FIFTY-THREE  OF  THE  LAWS  OF NINETEEN
HUNDRED EIGHTY-EIGHT,  CHAPTER  FIFTY-THREE  OF  THE  LAWS  OF  NINETEEN
HUNDRED EIGHTY-NINE, CHAPTER FIFTY-THREE OF THE LAWS OF NINETEEN HUNDRED
NINETY,  CHAPTER FIFTY-THREE OF THE LAWS OF NINETEEN HUNDRED NINETY-ONE,
CHAPTER FIFTY-THREE OF THE LAWS OF NINETEEN HUNDRED NINETY-TWO,  CHAPTER
FIFTY-THREE  OF  THE  LAWS  OF  NINETEEN  HUNDRED  NINETY-THREE, CHAPTER
FIFTY-THREE OF THE LAWS OF NINETEEN  HUNDRED  NINETY-FOUR,  AND  CHAPTER
FIFTY-THREE  OF  THE LAWS OF NINETEEN HUNDRED NINETY-FIVE, SHALL BE MADE
AVAILABLE FOR  THE  SEED-NY  INVESTMENT  FUND  ESTABLISHED  PURSUANT  TO
SECTION  FORTY-FOUR  OF THE NEW YORK STATE URBAN DEVELOPMENT CORPORATION
ACT.
  2. THE BOARD SHALL PREPARE A PLAN, WITHIN NINETY  DAYS  FOLLOWING  THE
EFFECTIVE  DATE  OF  THIS  SECTION,  TO LIQUIDATE ALL CURRENT ASSETS AND
LIABILITIES OF THE SMALL BUSINESS TECHNOLOGY INVESTMENT FUND.
  3. THE PUBLICLY-TRADED ASSETS AND ANY WORKING CAPITAL  SHALL  BE  MADE
FULLY  AVAILABLE  TO THE SEED-NY INVESTMENT FUND ESTABLISHED PURSUANT TO
SECTION FORTY-SIX OF SECTION ONE OF THE NEW YORK STATE URBAN DEVELOPMENT
CORPORATION ACT FOR ALLOCATION TO REGIONAL INVESTMENT FUNDS AS  SOON  AS
PRACTICABLE.
  4.  THE BOARD SHALL ALSO TAKE WHATEVER ACTIONS ARE NECESSARY TO LIQUI-
DATE THE REMAINING ASSETS OF THE SMALL  BUSINESS  TECHNOLOGY  INVESTMENT
FUND  AS  SOON AS PRACTICABLE, BUT NOT MORE THAN TWO YEARS FOLLOWING THE
EFFECTIVE DATE OF THIS SECTION.
  S 3. This act shall take effect immediately.

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