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View NCGA Bill Details2021
Senate Bill 649 (Public) Filed Tuesday, April 6, 2021
Intro. by Salvador, Newton, deViere.

Status: Ref To Com On Rules and Operations of the Senate (Senate action) (Apr 7 2021)

Bill History:

S 649

Bill Summaries:

  • Summary date: Apr 9 2021 - View Summary

    Makes organizational changes and now adds a new Subpart B, Technology Development Funding, to Part 2I of Article 10 of GS Chapter 143 B, providing as follows. Establishes the North Carolina Technology Development Investment Program (Program) to provide early-stage, evergreen venture capital for the purpose of fostering and funding upcoming businesses in the state and supporting entrepreneurs in their efforts to build valuable companies. Creates the North Carolina Technology Development Corporation (Corporation) as a State agency, within the Department of Commerce, to perform at least the nine listed functions, including: assisting in transferring to the private sector the results and products of scientific research and development conducted by higher education and federal research institutions in the state, assisting in commercializing those results and products, investing in NC–based technology companies and promoting the commercialization and growth of technology companies and jobs in the state, and building a long-term entrepreneurial capacity and sustained venture capital presence in the state. Creates a 15-member Board of Directors (Board) to oversee the Corporation; allows the Board to create an advisory committee. Sets out additional provisions governing the Board. Requires the Corporation to adopt a policy for conflicts of interest and gifts to guide the Board, officers, and employees. Requires the Corporation to adopt regulations establishing the investment committee, its responsibilities, and the procedures for appointing members of the committee.

    Allows the Corporation to make grants to or provide equity investment financing for qualifying businesses that are technology-based if the investments are made on review and approval of a written application that meets the specified requirements. Requires the Corporation to adopt regulations to govern investments that specify: (1) types of qualified businesses in which an investment may be made; (2) basic standards an enterprise must meet to qualify for an investment; (3) amount of money available for investment; (4) the Corporation's investment policy statement descripting the procedures, criteria, investment philosophy, and guidelines for how investment decisions will be made; and (5) process for the consideration of whether investments help to foster inclusive and diverse entrepreneurship. Allows the Board of Governors and the State Board of Community Colleges to contract with the Corporation or its subsidiaries, assign to the Corporation or its subsidiaries intellectual property and other resources to assist it in development and activities, and assign faculty and staff to the Corporation. Requires outreach to rural areas. Subjects the Corporation's books and records to audit. Requires the Corporation to report on specified issues to the named NCGA committee and division.

    Creates the nine-member Startup Capital Authority (Authority) within the Corporation, with members serving four-year terms. Charges the Authority with providing advice to and consulting with the Corporation in connection with the administration of the Program. Requires the Authority to meet at least quarterly to review the Corporation's investment policies, investment decisions, and adherence to the statutory and regulatory requirements imposed on the Corporation.

    Creates the Startup Capital Enterprise Fund to make qualified investments in qualified businesses, with the funds to be used as follows: (1) 67% to venture firms to fund the making of qualified investments based on the criteria set forth in this subpart, with no more than 20% invested in sidecar fund affiliates of the venture firms and (2) the remainder for qualified investment in qualified businesses.

    Requires the Authority to use a third party to establish application procedures for an entity to be certified as a venture firm for participation in the Program and to review and evaluate applications for venture firm certification. Upon recommendation from the third party, requires the Authority to select venture firms to (1) receive funds from the Fund consistent with the investment criteria set forth in this subpart and (2) make investments in the state equal to or exceeding the amount of funds received. Sets out issues the Authority must consider when selecting applicants for venture firm certification. Sets out requirements for certification as a venture firm for participation in the Program, including that the applicant have an equity capitalization, net assets, or written commitments of a least $500,000. Requires a venture to inform the Corporation in writing when it needs funds from the Fund for investment or for the payment of approved fees and expenses. Requires the venture firms to make specified reports to the Corporation. Allows certified venture firms to make a qualified distribution at any time; sets out the process under which a distribution can be made if it is not a qualified distribution. Requires each venture firm certified to participate in the Program to make equity investments of no less than 50% of the capital allocated to qualified businesses within three years of each capital allocation; sets out actions that may be taken against the firm if it fails to comply.

    Requires the Corporation to administer the Fund and allows rulemaking to do so. Requires the Corporation to report annually on the tax credits generated under the subpart to the specified NCGA committees and division. Specifies what is to be included in the report.

    States the NCGA's intent to use funds from the American Rescue Plan Act of 2021 to fund the Program.

    Effective when an act of the NCGA appropriating funds for its implementation becomes effective.