HB 1381

1	A bill to be entitled
2	An act relating to the Technology Seed Capital Fund;
3	providing definitions; providing for the creation of the
4	Technology Seed Capital Fund by the Institute for the
5	Commercialization of Public Research; providing for the
6	creation of a fund management committee by the board of
7	directors of the institute; forbidding members of the
8	committee from investing in a company for a specified
9	period after an investment in a company is approved;
10	specifying responsibilities of the institute and the fund
11	management committee with respect to the fund; specifying
12	the requirements for an investment management plan
13	proposal from interested applicants for the investment
14	manager position; specifying the authority of the
15	investment manager for the fund; specifying qualifications
16	for investments of the fund; requiring that proposed
17	investments be matched by the private sector before the
18	fund invests; requiring that the company be domiciled in
19	the state and operate in one of the targeted industry
20	clusters; requiring that the company have certain
21	positions and abilities; limiting the amount of individual
22	investments of the fund; requiring earnings from the fund
23	to be reinvested; limiting the administrative costs of the
24	fund; requiring the institute to submit an annual report
25	to the Governor and Legislature relating to the activities
26	of the fund; providing an effective date.
27
28	WHEREAS, consistent access to significant risk capital at
29	all stages of development is integral to the creation and growth
30	of small technology companies, and the maturation of these
31	companies into the leading companies of tomorrow will facilitate
32	the diversification of Florida's economy, and
33	WHEREAS, young companies have little to no collateral with
34	which to secure traditional loans and limited assets and track
35	records with which to attract financing from private equity
36	firms, and
37	WHEREAS, this state is not the natural home of the venture
38	capital industry, and as a result, companies in this state are
39	severely disadvantaged in their efforts to attract venture
40	capital investment, and
41	WHEREAS, a lack of seed-stage funding exists in this state
42	despite the fact that the leaders of this state have recognized
43	the venture capital challenge and in recent years have taken
44	significant action to help address it, in particular through the
45	creation of the Florida Opportunity Fund and the Florida Growth
46	Fund, and
47	WHEREAS, to date very little capital is available to
48	companies in this state in the crucial seed stage, and
49	WHEREAS, the 2010-2015 Roadmap to Florida's Future called
50	for the creation of a new mechanism for seed-stage funding to
51	address the state's seed stage capital gap as part of a
52	comprehensive strategy to promote high-tech, high-wage,
53	innovation-driven growth, and
54	WHEREAS, broad-based support exists among the state's
55	economic development, business, and academic leaders for the
56	creation of a Florida Technology Seed Capital Fund, and
57	WHEREAS, it is recommended that the state make a $25
58	million investment to establish a Technology Seed Capital Fund,
59	NOW, THEREFORE,
60
61	Be It Enacted by the Legislature of the State of Florida:
62
63	Section 1.  Technology Seed Capital Fund; creation;
64	duties.-
65	(1)  DEFINITIONS.-As used in this section, the term:
66	(a)  "Fund" means the Technology Seed Capital Fund.
67	(b)  "Institute" means the Institute for the
68	Commercialization of Public Research.
69	(2)  TECHNOLOGY SEED CAPITAL FUND.-
70	(a)  Subject to legislative appropriations, the institute
71	shall facilitate the creation of the fund. This fund shall be a
72	private, nonprofit corporation organized and operated under
73	chapter 617, Florida Statutes. The institute shall be the fund's
74	sole shareholder or member. The fund is not a public corporation
75	or instrumentality of the state. The fund shall manage its
76	business affairs and conduct business consistent with its
77	organizational documents and the purposes set forth in this
78	section. Notwithstanding the powers granted under chapter 617,
79	Florida Statutes, the fund may not amend, modify, or repeal a
80	bylaw or article of incorporation without the express written
81	consent of the institute.
82	(b)  The board of directors of the institute shall direct
83	its venture advisory board to elect or appoint a five-person
84	fund management committee. Members of the committee shall serve
85	without compensation, but are entitled to reimbursement for all
86	reasonable, necessary, and actual expenses authorized under s.
87	112.061, Florida Statutes, and as determined and approved by the
88	board of directors of the institute. Members of the committee
89	may not invest in any company receiving funding from the fund
90	for 6 months after an investment in the company by the fund is
91	formally approved. The staff of the institute shall provide
92	administrative support and assistance to the fund management
93	committee upon request.
94	(3)  FUND MANAGEMENT COMMITTEE RESPONSIBILITIES.-
95	(a)  Upon organization, the fund management committee shall
96	conduct a national solicitation for proposals for investment
97	management plans from interested parties. The investment
98	management plan must address the applicant's level of
99	experience, quality of management, investment philosophy and
100	process, proof of success in fund management and fundraising,
101	prior investment fund results, and plan for achieving the
102	purposes of this section.
103	(b)  The fund management committee is responsible for
104	negotiating the terms of the contract with an investment manager
105	for the fund and for recommending the execution of the contract.
106	(c)  The fund management committee must consult with the
107	board of directors of the institute before recommending the
108	pursuit of any investment management plan proposal or the hiring
109	of an investment manager for the fund.
110	(4)  RESPONSIBILITIES OF THE INSTITUTE.-The board of
111	directors of the institute shall be responsible for managing the
112	business affairs of the fund, such as accounting, audit,
113	insurance, and related requirements; soliciting and negotiating
114	the terms of, contracting for, and receiving investment capital
115	and proceeds with the assistance of the investment manager;
116	receiving investment returns; paying investors and debtors; and
117	reinvesting the investment returns in the fund in order to
118	provide additional seed capital to facilitate the creation of
119	new businesses and jobs in this state and further diversify the
120	economy of this state.
121	(5)  FUND MANAGER.-For the purpose of mobilizing investment
122	in Florida-based, new technology companies and generating a
123	return sufficient to continue reinvestment, the investment
124	manager of the fund may:
125	(a)  Deploy the fund to make direct investments in
126	individual businesses;
127	(b)  Negotiate any and all terms and conditions for
128	investments of the fund;
129	(c)  Track progress of the companies in the fund's
130	portfolio; and
131	(d)  Increase the visibility of the companies in the fund's
132	portfolio to help raise additional capital from private or
133	corporate sources.
134	(6)  INVESTMENTS BY THE FUND.-
135	(a)  The fund may not invest in a company unless:
136	1.  The fund's proposed investment in a company is matched
137	at least 1 to 1 by the private sector before the fund invests;
138	2.  The company is domiciled in this state and is operating
139	in one of the state's targeted industries as identified pursuant
140	to s. 288.106(2), Florida Statutes, which include, but are not
141	limited to, life sciences, information technology, energy, clean
142	technology, advanced manufacturing processes, aviation and
143	aerospace, and homeland security and defense; and
144	3.  The fund determines that the company has strong
145	intellectual property positions, a capable management team,
146	readily identifiable paths to market or commercialization, the
147	ability to obtain other sources of capital to leverage the
148	state's investment, and the potential to attract additional or
149	follow-on funding.
150	(b)  Individual seed investments by the fund may range from
151	$30,000 to $300,000.
152	(c)  Any earnings from the fund must be returned to the
153	fund to be reinvested consistent with the purposes of this act.
154	(7)  ADMINISTRATIVE COSTS OF THE FUND.-The annual
155	administrative costs of the fund may not exceed 5 percent of the
156	total program appropriation, except that the fund may pay its
157	investment manager a carried interest.
158	(8)  ANNUAL REPORT.-By December 1 of each year, the
159	institute shall issue an annual report concerning the
160	investments of the fund to the Governor, the President of the
161	Senate, and the Speaker of the House of Representatives. The
162	annual report, at a minimum, must include:
163	(a)  An accounting of the amount of investments disbursed
164	by the fund and the progress of the fund.
165	(b)  A description of the benefits to this state resulting
166	from the fund, including the number of businesses created,
167	additional capital raised, associated industries started, the
168	number of jobs created, and the growth of related research
169	projects.
170	(c)  Independently audited financial statements, including
171	statements that show receipts and expenditures during the
172	preceding fiscal year for the personnel, administration, and
173	operational costs of the fund. Any returns on the investments of
174	the fund shall be retained by the institute and reinvested in a
175	manner consistent with the mandates of this section.
176	Section 2.  This act shall take effect July 1, 2011.

CODING: Words stricken are deletions; words underlined are additions.