Docstoc

Seed Stage Capital Proposal

Document Sample
Seed Stage Capital Proposal Powered By Docstoc
					                                            Title 19
                                   CORPORATIONS AND BUSINESS
                           Part VII. Economic Development Corporation
                            Subpart 11. Louisiana Seed Capital Program


   Chapter 77. Seed Capital Program                            be in business for one year or less, but have sold their
                                                               product commercially;
§7701. Purpose
                                                                    4. first-stage financing to companies that have
   A. The purpose of this program is to encourage the          expended their initial capital and require funds to initiate
formation of Louisiana-based seed capital funds. Funding       full-scale manufacturing and sales.
under this program shall be limited to those qualified
                                                                 AUTHORITY NOTE: Promulgated in accordance with R.S.
organizations who agree to invest such funds exclusively       51:2312.
in companies based in Louisiana for the purpose of               HISTORICAL NOTE: Promulgated by the Department of
financing any process, technique, product, or device           Economic Development, Economic Development Corporation,
which is or may be exploitable commercially, which has         LR 26:2251 (October 2000).
advanced beyond the theoretical state, and which is            §7705. Eligibility
capable of being or has been reduced to practice without
regard to whether a patent has or could be granted. Not          A. Applicant organization must be a Louisiana-based
intended for retail or professional services.                  fund organized for the sole purpose of making seed
                                                               investments in businesses.
  AUTHORITY NOTE: Promulgated in accordance with R.S.
51:2312.                                                         B. Must be organized for profit.
  HISTORICAL NOTE: Promulgated by the Department of
Economic Development, Economic Development Corporation,          C. The applicant must demonstrate that its
LR 26:2251 (October 2000).                                     management personnel have at least three years of
§7703. Definitions                                             experience in managing investments in individual,
                                                               privately-held companies, utilizing funds provided by
  A. For the purposes of this program seed capital will        others to make said investments.
be defined as:
                                                                  D. Have raised a minimum of $250,000 to be eligible
    1. an amount no less than $25,000 of capital               for co-investments or raised a minimum of $500,000 to be
provided to an inventor or entrepreneur to prove a concept     eligible for a match investment. The minimum funds may
and to qualify for start-up capital. This may involve          be in cash and commitments.
product development and market research as well as
building a management team and developing a business             E. A minimum cash investment sufficient to cover the
plan, if the initial steps are successful;                     general and administrative costs for the first year.
                                                                 AUTHORITY NOTE: Promulgated in accordance with R.S.
    2. research and development financing to finance           51:2312.
product development for start-up as well as more mature          HISTORICAL NOTE: Promulgated by the Department of
companies;                                                     Economic Development, Economic Development Corporation,
                                                               LR 26:2251 (October 2000).
    3. start-up financing to companies completing
product development and initial marketing. Companies           §7707. Application for Co-Investment
may be in the process of organizing or they may already          A. Prior to a Seed Capital Fund submitting a request
                                                               to be considered for co-investment by LEDC the Seed




1051 North Third Street   T 225.342.3000                                                             Page 1 of 6
Baton Rouge, LA 70802     F 225.342.9095    LEDLouisiana.com                                         Created 3/17/2009
Capital Fund must submit an application for the fund to                    NOTE: Louisiana Economic Development Corporation
                                                                           reserves the right to perform criminal background checks
be considered qualified. The application for qualification                 on these key people.
to the Economic Development Corporation shall consist
of detailed information covering two main categories:                   D. Business Plan
   1. experience and qualifications of the proposed                       1.      Market
management team; and
                                                                             a. Describe and discuss the types of businesses
     2. the business plan for the Seed Capital Fund. The              that the Seed Capital Fund will finance. Discuss the extent
following Sections specify in more detail the information             to which the Seed Capital Fund intends to specialize in
that should be covered. While these sections provide a                certain industries, or whether a more broad based
possible format, the applicant should in no way feel                  approach is planned.
bound by this format. The applicant can use its own
                                                                            b. Describe the size range of businesses that it is
format, as long as the basic information is provided.
                                                                      contemplated the Seed Capital Fund will finance, with a
Moreover, the applicant should feel free to provide
                                                                      general indication of where most of the focus is expected.
additional information which is viewed as relevant. The
Economic Development Corporation may request                                 c. Discuss the life cycle stage or stages of the
additional information beyond what is specified below.                companies which the Seed Capital Fund will likely
                                                                      finance, with an indication of where most of the focus is
   B. The completed application will be submitted to the
                                                                      contemplated.
next scheduled screening committee meeting for
recommendations. The recommendations of the screening                        d. Discuss the geographic area in which the Seed
committee will be submitted to the full board of directors            Capital Fund plans to focus. Specify the city or parish in
at their next scheduled meeting for final approval.                   which the Seed Capital Fund's principal office is planned
                                                                      to be located, and discuss intentions, if any, to establish
  C. Experience and Qualifications
                                                                      any additional offices.
    1. Submit résumés, references, and personal
                                                                             e.    Provide any market analysis that you deem
financial statements for all principal members of the
                                                                      relevant.
management team that are identified.
     NOTE: Louisiana Economic Development Corporation
                                                                           2. Financing. Describe and discuss the financing
     reserves the right to perform criminal background checks         instruments that are intended to be used by the Seed
     on the principal members of management.                          Capital Fund. Discuss the anticipated mix of the various
                                                                      types of financing instruments. Discuss the anticipated
    2. Describe the responsibilities of each of the
                                                                      size range of investments to be made, and information
principal members of the management team that have
                                                                      regarding pricing, term, and other conditions. Discuss
been identified. If any of these people are not full time,
                                                                      risk/return expectations on projects. Discuss methods of
describe their other activities.
                                                                      exit from investments.
    3. Describe the responsibilities of any principal
                                                                           3. Marketing Strategy. Describe the Seed Capital
management position for which a person has not been
                                                                      Fund's plans and approach to marketing its services,
identified.
                                                                      including the identification of potential applicants for
    4. Specify any directors that have been identified,               financing assistance.
and submit resumes.
                                                                           4. Screening Process and Evaluation Criteria.
     5. Specify any other key people that have been                   Discuss the anticipated number of business firms that will
identified, including any advisors, consultants, attorneys            be reviewed for possible investment, in comparison with
and accountants, and submit résumés and/or descriptions               the number that will actually be invested in. Discuss the
of firms.                                                             approach to screening business firms, and the evaluation
                                                                      criteria for deciding whether, and under what terms and
                                                                      conditions, to provide investment.




1051 North Third Street       T 225.342.3000                                                                    Page 2 of 6
Baton Rouge, LA 70802         F 225.342.9095       LEDLouisiana.com                                             Created 3/17/2009
    5. Fee Income. Discuss the potential for fee                projections based on differing assumptions, specify which
income, and any plans that the Seed Capital Fund might          set of assumptions are applicant's primary assumptions.
have for generating fee income.
                                                                       d. Specify computer programs           used      for
    6. Management Assistance. Discuss the plans of the          projections, and specify formulas used.
Seed Capital Fund to provide management and/or
                                                                  E. The application for the co-investment project shall
technical assistance to companies for which the Seed
                                                                contain but not be limited to the identical information
Capital Fund provides investment. Discuss the Seed
                                                                provided to the eligible Seed Capital Fund requesting the
Capital Fund's plans for monitoring its investments, and
                                                                co-investment.
enforcing provisions of investment agreements. Discuss
how the Seed Capital Fund plans to handle problem                 AUTHORITY NOTE: Promulgated in accordance with R.S.
investments. Discuss the Seed Capital Fund's plans to           51:2312.
provide management assistance to companies that the               HISTORICAL NOTE: Promulgated by the Department of
Seed Capital Fund is not investing in.                          Economic Development, Economic Development Corporation,
                                                                LR 26:2251 (October 2000).
     7. Complementary Relationships. Discuss the                §7709. Application Requirements for Match
nature of complementary relationships that are anticipated             Investment
with banks, commercial lenders, investment bankers,
venture capitalist and other institutions. This discussion        A.1. To apply to the Economic Development
can be based on general types of institutions and/or can        Corporation for a commitment to invest, a prospective
identify specific institutions where complementary              Seed Capital Fund shall submit detailed information
relationships have already been discussed.                      covering three main categories:
     8. Management Structure. Describe the proposed                   a.   fund raising;
management structure for the Seed Capital Fund, and                  b. experience and qualifications of the proposed
anticipated compensation for principal members of the           management team; and
management team.
                                                                       c. the business plan for the Seed Capital Fund.
     9. Idle Funds. Describe plans for the management           The following Sections specify in more detail the
of the idle funds of the Seed Capital Fund.                     information that should be covered. While these sections
    10. Tax and Accounting Issues. Discuss relevant tax         provide a possible format, the applicant should in no way
and accounting issues for the Seed Capital Fund.                feel bound by this format. The applicant can use its own
                                                                format, as long as the basic information is provided.
    11. Financial Projections
                                                                     2. Moreover, the applicant should feel free to
        a. Provide a detailed operating budget for the          provide additional information which is viewed as
first three years of the Seed Capital Fund's operation. The     relevant. The Louisiana Economic Development
first year shall be month by month. The second and third        Corporation may request additional information beyond
years may be presented on an annual basis.                      what is specified below.
        b. Provide performance projections, year by year,         B. All completed applications will be acted on by the
for a five-year period. These projections should show cash      requisite loan committee of the Louisiana Economic
flow, income and expense (including taxes), and balance         Development Corporation.
sheet data. For these performance projections, operating
expenses can be consolidated into one line item.                  C. Fund Raising
       c. Specify the assumptions used for the                      1. Specify the amount of LEDC commitment
performance projections. It is permissible to submit            sought.
several sets of performance projections based on differing
assumptions. However, if applicant submits several sets of




1051 North Third Street    T 225.342.3000                                                           Page 3 of 6
Baton Rouge, LA 70802      F 225.342.9095    LEDLouisiana.com                                       Created 3/17/2009
     2. Provide evidence of the amount of private capital                  5. Specify any other key people that have been
that has been raised. Specify the ratio of actual cash to             identified, including any advisors, consultants, attorneys
commitments raised.                                                   and accountants, and submit resumes and/or descriptions
                                                                      of firms.
    3. Describe the basic legal structure of the Seed
Capital Fund.                                                              NOTE: Louisiana Economic Development Corporation
                                                                           reserves the right to perform criminal background checks
     4. Describe and discuss the applicant's fund raising                  on these key people.
strategy for raising of any additional private capital.                 E. Business Plan
    5. Specify the principal investor sources that the                    1.      Market
applicant will be targeting.
                                                                             a. Describe and discuss the types of businesses
     6. What is applicant's basic proposal to prospective             that the Seed Capital Fund will finance. Discuss the extent
private investors. What expectations and objectives are               to which the Seed Capital Fund intends to specialize in
the applicant specifying. This includes, for example,                 certain industries, or whether a more broad based
representations regarding reasonably expected returns on              approach is planned.
private equity investment, indirect financial benefits, if
any, and social purposes, if applicable.                                    b. Describe the size range of businesses that it is
                                                                      contemplated the Seed Capital Fund will finance, with a
     7. List all specific investors and financing                     general indication of where most of the focus is expected.
commitments already obtained, including documentation
for each. This should include the evidence of the initial                    c. Discuss the life cycle stage or stages of the
$500,000 required capital.                                            companies which the Seed Capital Fund will likely
                                                                      finance, with an indication of where most of the focus is
     8. Specify whether applicant anticipates taking in               contemplated.
all of the LEDC equity investment at closing, or whether
applicant plans a phase in. If a phase-in is planned,                        d. Discuss the geographic area in which the Seed
specify the proposed schedule. It is permissible to have              Capital Fund plans to focus. Specify the city or parish in
different scenarios based on the actual amount of equity              which the Seed Capital Fund's principal office is planned
capital raised.                                                       to be located, and discuss intentions, if any, to establish
                                                                      any additional offices.
  D. Experience and Qualifications
                                                                             e.    Provide any market analysis that you deem
    1. Submit resumes, references, and personal                       relevant.
financial statements for all principal members of the
management team that are identified.                                       2. Financing. Describe and discuss the financing
     NOTE: Louisiana Economic Development Corporation
                                                                      instruments that are intended to be used by the Seed
     reserves the right to perform criminal background checks         Capital Fund. Discuss the anticipated mix of the various
     on the principal members of management.                          types of financing instruments. Discuss the anticipated
                                                                      size range of investments to be made, and information
    2. Describe the responsibilities of each of the
                                                                      regarding pricing, term, and other conditions. Discuss
principal members of the management team that have
                                                                      risk/return expectations on projects. Discuss methods of
been identified. If any of these people are not full time,
                                                                      exit from investments.
describe their other activities.
                                                                           3. Marketing Strategy. Describe the Seed Capital
    3. Describe the responsibilities of any principal
                                                                      Fund's plans and approach to marketing its services,
management position for which a person has not been
                                                                      including the identification of potential applicants for
identified.
                                                                      financing assistance.
    4. Specify any directors that have been identified,
                                                                          4. Screening Process and Evaluation Criteria.
and submit resumes.
                                                                      Discuss the anticipated number of business firms that will




1051 North Third Street       T 225.342.3000                                                                    Page 4 of 6
Baton Rouge, LA 70802         F 225.342.9095       LEDLouisiana.com                                             Created 3/17/2009
be reviewed for possible investment, in comparison with                 c. Specify the assumptions used for the
the number that will actually be invested in. Discuss the       performance projections. It is permissible to submit
approach to screening business firms, and the evaluation        several sets of performance projections based on differing
criteria for deciding whether, and under what terms and         assumptions. However, if applicant submits several sets of
conditions, to provide investment.                              projections based on differing assumptions, specify which
                                                                set of assumptions are applicant's primary assumptions.
    5. Fee Income. Discuss the potential for fee
income, and any plans that the Seed Capital Fund might                 d. Specify computer programs            used      for
have for generating fee income.                                 projections, and specify formulas used.
    6. Management Assistance. Discuss the plans of the            AUTHORITY NOTE: Promulgated in accordance with R.S.
Seed Capital Fund to provide management and/or                  51:2312.
technical assistance to companies for which the Seed              HISTORICAL NOTE: Promulgated by the Department of
Capital Fund provides investment. Discuss the Seed              Economic Development, Economic Development Corporation,
                                                                LR 26:2253 (October 2000).
Capital Fund's plans for monitoring its investments, and
enforcing provisions of investment agreements. Discuss          §7711. Application Process
how the Seed Capital Fund plans to handle problem                 A. Applications for funding under this program must
investments. Discuss the Seed Capital Fund's plans to           be submitted to the Executive Director, Economic
provide management assistance to companies that the             Development Corporation, P.O. Box 44153, Baton Rouge,
Seed Capital Fund is not investing in.                          70804.
     7. Complementary Relationships. Discuss the                    1.   Co-Investment Application
nature of complementary relationships that are anticipated
with banks, commercial lenders, investment bankers,                   a. The application for eligibility of the Seed
venture capitalist and other institutions. This discussion      Capital Fund and the co-investment project may be
can be based on general types of institutions and/or can        submitted simultaneously for consideration.
identify specific institutions where complementary                     b. Once a Seed Capital Fund is deemed eligible,
relationships have already been discussed.                      the Fund is not required to resubmit an eligibility
     8. Management Structure. Describe the proposed             application for subsequent co-investment requests.
management structure for the Seed Capital Fund, and                 2. All completed applications will be acted on by
anticipated compensation for principal members of the           the requisite loan committee of the Economic
management team.                                                Development Corporation.
     9. Idle Funds. Describe plans for the management             AUTHORITY NOTE: Promulgated in accordance with R.S.
of the idle funds of the Seed Capital Fund.                     51:2312.
                                                                  HISTORICAL NOTE: Promulgated by the Department of
    10. Tax and Accounting Issues. Discuss relevant tax
                                                                Economic Development, Economic Development Corporation,
and accounting issues for the Seed Capital Fund.                LR 26:2254 (October 2000).
    11. Financial Projections                                   §7713. Investment
        a. Provide a detailed operating budget for the            A. Co-Investment
first three years of the Seed Capital Fund's operation. The
first year shall be month by month. The second and third             1. An eligible fund that has not received a match
years may be presented on an annual basis.                      investment from the Economic Development Corporation
                                                                may apply for Co-Investment funds on a case by case
        b. Provide performance projections, year by year,       basis. The co-investment of Economic Development
for a five-year period. These projections should show cash      Corporation shall not exceed the lesser of 50 percent of
flow, income and expense (including taxes), and balance         the total round of investment needed or $250,000.
sheet data. For these performance projections, operating
expenses can be consolidated into one line item.




1051 North Third Street    T 225.342.3000                                                            Page 5 of 6
Baton Rouge, LA 70802      F 225.342.9095    LEDLouisiana.com                                        Created 3/17/2009
     2. Only investments in Louisiana businesses are             necessary legal instruments after certification by counsel
eligible for co-investments.                                     that all legal requirements have been met.
    3. Co-investments will be on the same terms and                AUTHORITY NOTE: Promulgated in accordance with R.S.
conditions as the seed capital fund has negotiated with the      51:2312.
business.                                                          HISTORICAL NOTE: Promulgated by the Department of
                                                                 Economic Development, Economic Development Corporation,
  B. Match Investment                                            LR 26:2254 (October 2000).
     1. An eligible fund may receive a match investment          §7715. Reporting
equal to $1.00 of LEDC funds for each $2.00 of privately           A. Each year, on the anniversary date of the initial
raised funds. The maximum LEDC investment shall not to           disbursement of funds, or on such date as may be
exceed $1,000,000.                                               authorized by the corporation, each recipient of funds
    2. An eligible fund shall be a Louisiana organized           shall provide the following:
and based Seed Capital Fund. For purposes of this                   1. list of all investors in the fund, including the
program, "organized and based" means the seed capital            amounts of investment and nature of the investment;
applicant is registered with the Secretary of State's office
and that it maintains a staffed office in Louisiana where             2. a statement of financial condition of the fund
investments may be initiated and closed.                         including, but not limited to, a balance sheet, profit and
                                                                 loss statement and changes in financial condition;
     3. The method of investment will be equal to the
method of the other investors i.e., committed capital for            3.   current reconciliation of the fund's net worth;
committed capital; cash investment for cash investment,               4. annual audited financial statement prepared by a
or cash and commitment for cash and commitment.                  certified public accountant (prepared within 120 days of
    4. The terms of the investment will be negotiated            the end of the fund's fiscal year).
on a case by case basis.                                           AUTHORITY NOTE: Promulgated in accordance with R.S.
  C. Closing                                                     51:2312.
                                                                   HISTORICAL NOTE: Promulgated by the Department of
     1. Prior to disbursement of funds, the secretary-           Economic Development, Economic Development Corporation,
treasurer and one of the following; president, chairman or       LR 26:2254 (October 2000).
executive director of the corporation, shall execute all




1051 North Third Street    T 225.342.3000                                                              Page 6 of 6
Baton Rouge, LA 70802      F 225.342.9095     LEDLouisiana.com                                         Created 3/17/2009

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:24
posted:8/10/2011
language:English
pages:6
Description: Seed Stage Capital Proposal document sample