Updated Invest Georgia “Frequently Asked Questions” FAQ

20 May

1.) Is this the “official” blog for the Invest Georgia Program?

No—this is actually a personal blog I created a few years ago. Historical posts (2012-2015) include angel investing and other topics. However, going forward, I’ll likely concentrate on the Invest Georgia Program. (I keep the older posts open primarily for reference.)

2.) Is there any additional information about Invest Georgia available (besides this blog)?

Yes! Here is the “2015 End of Year Report” we sent in December, 2015 to Governor Deal, Lt. Governor Casey Cagle, House Speaker David Ralston, the Senate Finance Committee and the Chairperson on the House Ways and Means Committee.

Here is also a link to the Invest Georgia website. Of course, feel free to contact me directly as well. I’d be happy to answer questions.

3.) Who “runs” the Invest Georgia Program?

I am the full time Executive Director of the program and run day-to-day operations. I work closely with our investment consultant, LCG Associates, and the Invest Georgia Board of Directors. I report directly to the IG Board of Directors. The BOD members were appointed to their roles by Governor Deal, Lt. Governor Casey Cagle and House Speaker David Ralston.

4.) Where are the Invest Georgia offices?

We are in the “Hardin” building located at 1380 West Paces Ferry Road.

5.) Has the Invest Georgia program made any investments?

Yes–The Invest Georgia Program has committed $3,000,000 to TTV Capital in Fund IV. TTV Capital is HQ’ed in Atlanta and specializes in the “FinTech” industry (financial services).

6.) Is Invest Georgia going to continue to invest in 2016?

Absolutely. We are evaluating a number of venture capital and private equity groups and hope to have a new announcement this summer

7.) How much money does the Invest Georgia program have to invest?

We hope to fully invest the remaining $7,000,000 of the initial program tranche by the end of the 2016 calendar year.

8.) Can the Invest Georgia Program and/or fund invest in my company directly?

No. By law, the Invest Georgia Program is only allowed to invest in Georgia based funds–either venture capital or private equity. We cannot make a direct investment from the Program into a Georgia company. Any Georgia-based company looking for capital from the Invest Georgia program would need to speak to venture or private equity funds that have received capital from the Invest Georgia Program.

9.) What is the “mission” of the Invest Georgia Program?

To create a long-lasting, efficient and transparent program that can allocate long term capital to fast growing, Georgia based companies.

10.) Why was legislation needed to do create this program?

Georgia has considered programs similar to Invest Georgia since 2002. None have been successful until Invest Georgia. It took a coordinated, 3 year effort with various needed parties (legislative, executive, investment) working together to create a program that has oversight, is transparent to all and is meant to be a leadership program for the State of Georgia and the companies and employees that work hard to make this state great.

11.) Will Invest Georgia grow in size?

Yes. Invest Georgia was allocated an additional $10,000,000 in the 2016 Legislative Session. These monies will be allocated during the fiscal year for the State of Georgia which starts July 1, 2016.

2016 Invest Georgia FAQ #2

2 Mar

Continuation from 2016 Invest Georgia FAQ #1

8.) Will Invest Georgia “fund” every venture capital fund and private equity fund in Georgia that applies to Invest Georgia for an investment?

I wish we could. The demand in the Georgia market for funding far exceeds what we have available. The Invest Georgia Program, by law, can grow to $100,000,000. Right now, we have been allocated $10,000,000. We are hoping that the State leadership will continue to fund the program for fiscal 2017. The 2017 budget is now being discussed and we hope to be included!

9.) How much has been allocated from Invest Georgia to Georgia funds to date?

$3,000,000 has been allocated to TTV Capital. (See FAQ #1). We are currently in “mid stage” discussions with one additional Georgia fund and we are in the very early stages of discussion with 2-3 others.

10.) Will Invest Georgia fully allocate the initial ($10M) funding in 2016?

I believe that we will.

11.) What is the most surprising thing that you have learned in the last year (post “launch” of Invest Georgia in early 2015)?

That most of the small to midsize VC or PE funds in Georgia are primarily funded by “HNW” (high net worth) individuals and families. Institutional (university endowments, pension funds, etc) investors in these small to midsize funds are rare and/or non-existent in Georgia. Only the very largest or most experienced funds in Georgia are backed by institutional investors. For the venture/private equity market to grow in Georgia, more institutional investors need to participate. Invest Georgia can help fill that institutional gap to encourage other in-state AND out of state institutional investors to engage with Georgia funds and/or companies.

12.) Do the Georgia pension funds (ERS) actively invest in Georgia VC or PE funds?

No.  (The Firefighters Fund does have a small alternative investment and ERS has a small amount of “secondaries”–but none of these investments are in Georgia.)

13.) Are the Georgia pension funds allowed to invest in Georgia-based venture capital or private equity funds?

Yes. A 2012 law allows ERS to invest up to 5% of assets in “alternative assets”-which would include venture capital and private equity. However, the qualifications of this law exclude all but a very few of the very largest Georgia venture or private equity funds.

14.) Is any of the Invest Georgia capital from Georgia ERS?

No.

15.) Is any of the Invest Georgia capital from the Georgia Teachers Retirement System?

No.

16.) Will you seek additional capital from the Georgia ERS?

No. (I get these pension questions a lot–so thought I would go ahead and address.)

17.) Do you enjoy working with the venture and private equity groups in town?

Absolutely. Very smart, very professional and very tuned into specific, high growth markets (healthcare IT, cyber security, fintech, SaaS marketing, etc) in the state Georgia.

Stay tuned for FAQ #3!

2016 Invest Georgia FAQ #1

18 Feb

1.) Is the Invest Georgia Program active in 2016?

Yes! Here is the “2015 End of Year Report” we sent in December, 2015 to Governor Deal, Lt. Governor Casey Cagle, House Speaker David Ralston, the Senate Finance Committe and the Chairperson on the House Ways and Means Committee.

2.) Has the Invest Georgia program made any investments?

Yes! The Invest Georgia Program has comitted $3,000,000 to TTV Capital in Fund IV. TTV Capital is HQ’ed in Atlanta and specializes in the “FinTech” industry (financial services).

3.) Is Invest Georgia going to continue to invest in 2016?

Yes. We are currently talking to a Georgia-based private equity group and are evaluating other venture capital and private equity groups that may open new funds in 2016.

4.) How much money is in the Invest Georgia Fund?

Invest Georgia received an initial tranche of capital in the first quarter of 2015 in the amount of $10,000,000. The Invest Georgia fund is allowed by law to grow up to $100M based on state appropriations. We hope the the Georgia General Assembly will continue to fund the program in 2016.

5.) Where can I find more information about invest Georgia?

Here is a link to the Invest Georgia website. Of course, feel free to contact me as well. I’d be happy to answer questions.

6.) Can the Invest Georgia Program and/or fund invest in my company directly?

No. By law, the Invest Georgia Program is only allowed to invest in Georgia based funds–either venture capital or private equity.

7.) Will you be doing more FAQ’s?

Absolutely. We spent the better part of 2015 building out the Invest Georgia “platform”, hiring an investment consultant (LCG Associates), building a “forward schedule” of venture and private equity funds in Georgia and, of course, conducting due diligence on our current TTV investment. Now comes the even more exciting part–taking the story out to Georgia communities and looking for additional opportunities.

 

Update on the Invest Georgia Program: 2015 Legislative Session

4 May

In 2015, the Georgia General Assembly Legislative Session lasted from January 12 through April 2. The Invest Georgia Program was active during this Session through House Bill 439, which was amended late in the Session to include a $55,000,000 allotment for the Invest Georgia Program. This $55,000,000 allotment would be considered a second tranche of funding to fulfill the original Invest Georgia mission started in 2013 of creating a $100,000,000 state-based fund to help grow Georgia-based companies over the next decade. Invest Georgia was allocated $10,000,000 in the 2014 Legislative Session and is now actively conducting due diligence to invest this initial allotment.

In Georgia, the Governor has 40 days from the end of the Legislative Session to sign any passed legislation. The deadline for this time period this year is May 12. Governor Deal has yet to sign HB 439 and any support the community can give to encourage the passage of this bill would be greatly appreciated. This bill is highly supportive of the entire startup and investment community in Georgia.

Background on House Bill 439:(2015)

http://www.legis.ga.gov/Legislation/en-US/display/20152016/HB/439

– HB 439 is a “dual” legislative bill in that it supports two different types of programs in Georgia. HB 439 would fund the Invest Georgia Program with a $55M allotment, and HB 439 would also fund a completely separate program by the name of “New Markets Jobs Act”. The two programs are entirely separate, but both are contained in HB 439.

Invest Georgia is a program created by statute (HB 318) passed in 2013 that allows the State of Georgia to create a $100M venture and private equity fund that would exclusively fund Georgia-based companies. The Invest Georgia Program within HB 439 has wide community support and would be very supportive of early stage and growth stage Georgia-based companies. More about Invest Georgia can be found here:

www.investgeorgia.net

HB 318 (2013)

http://www.legis.ga.gov/legislation/en-US/display/20132014/HB/318

– The Georgia New Market Jobs Act program of HB 439 is an initiative supported by out-of-state investment firms (Advantage Capital, based in Louisiana and Enhanced Capital, based in New York) that mirrors a Federal Program by the name of the New Markets Tax Credit Program. Essentially, Advantage Capital and Enhanced wish to create a Georgia state-based tax credit program similar to the Federal New Market Jobs Act. The New Markets Jobs Act would fund Georgia companies in low income and rural areas only—very similar criteria to the federal program. Both Advantage Capital and Enhanced Capital have been active in Georgia politics since at least 2002 and were formerly supportive of earlier legislation in recent years known “CAPCOs”.

We hope that Governor Deal will continue his support for the Invest Georgia Program by agreeing to fulfill the prior commitment to help grow Georgia based companies. The Invest Georgia Program funds and supports homegrown entrepreneurial, high growth Georgia companies that create future high wage jobs, create a future tax base for Georgia, creates jobs within state borders and retains our educated workforce in Georgia.

Invest Georgia Program, 2015

31 Jan

I have not written on this particular blog in quite a while-Why?

This:

www.investgeorgia.net

The Invest Georgia Program officially launched yesterday, January  30, 2015. We have closed on, and are funded with, the first tranche of $10,000,000. Exciting times.

Over the next several weeks, I’ll be cleaning up this particular blog to make it more focused on venture capital in the state of Georgia. Some of my older posts on angel investing or crowdfunding may stay on this blog–but for the most part, this blog will now focus on my involvement in venture capital in the Great State of Georgia.

Note that this blog domain is investgeorgia.org while the website of Invest Georgia is investgeorgia.net

To make it a bit easier to answer questions about the Invest Georgia Program in the short term,  let’s do an old school FAQ–For today, I’ll run through a short list of the most popular questions I have received in recent days. I’ll try and repeat this for a few weeks as I receive more questions as I engage the Georgia community about the Invest Georgia Program.

1.) I heard it has taken a while to get the Invest Georgia program off the ground. Is that true?

Sure. We’ve been working on the Invest Georgia “concept” since 2011. The legislation allowing the program was introduced into the Georgia General Assembly during the 2012 Legislative Session (House Bill 718), was passed in 2013 Legislative Session (House bill 318) and signed into law in April of 2013. Since April of 2013, we have been hard at work putting the pieces of the program together and sourcing funding. The Invest Georgia is a unique program, one of the first of its kind in Georgia. So, it is to be expected to take time—to do it right.

2.) What is your role?

I am the Executive Director and am responsible for day to day operations. I report directly to the Board of Directors of the Invest Georgia program. The Board was appointed by Governor Deal, Lt. Gov. Cagle and Speaker of the House David Ralston. The list of the Board of Directors can be found on the website.

3.) What is the role of the Board of Directors?

Oversight and transparency of the program. Guidance to the Executive Director and Fund Administrator.

4.) What is the Fund Administrator?

As guided by the statute, the fund administrator will advise the Board of Directors on the initial due diligence of venture funds who apply for the program. The fund administrator will also advise on year end reports due to the Governor, Lt Governor, Speaker of the House, Chairperson of the Senate Finance Committee and the House Committee of Ways and Means as well as other duties deemed necessary by the Invest Georgia Board of Directors.

5.) Is there any oversight of the Invest Georgia program?

Yes. As you can see from question #4, the Invest Georgia Program has deliberately built in several layers of oversight.

Both the Executive Director and the Fund Administrator report to the Invest Georgia Board of Directors. The Board of Directors, in turn, report back to individuals or entities that appointed them to the Board of Directors: Governor, Lt Governor, or Speaker of the House. Reports are due annually to the respective bodies as mentioned in #4.

6.) Does the Invest Georgia Fund invest only in “startups” in the state of Georgia?

No.

60% of the fund will be directed towards “growth” stage Georgia companies and 40% of the fund will be directed towards “early stage” Georgia companies.

In the legislation, a “growth” stage company is generally defined as a company:

– HQ based in Georgia

– Revenues in excess of $1,000,000

– Under 100 employees

– A business not engaged in retail sales, real estate, any business where admission is charged, insurance, banking, financial services, natural resources extraction or professional services where a license is required.

In the legislation, an “early” stage company is generally defined as a company:

– HQ based in Georgia

-Revenues less than $1,000,000

– Under 20 employees

-Has not raised more than $2,000,000 in outside capital

– A business not engaged in retail sales, real estate, any business where admission is charged, insurance, banking, financial services, natural resources extraction or professional services where a license is required.

The venture capital funds participating in the Invest Georgia program will make the final decisions on investments. No company-specific investment decision making process will lie either with the Board of Directors or the Executive Director.

7.) Does the Invest Georgia Fund invest only in Georgia-based companies?

Yes.

8.) Does the Invest Georgia Fund invest directly into Georgia-based companies?

No. The Invest Georgia Fund is a “fund of funds”. The Invest Georgia Fund will invest directly into professionally run, Georgia-based venture capital funds that have a history of investing into Georgia companies. In turn, the selected venture funds will invest into Georgia based companies after their customary due diligence process.

9.) Are you excited to be involved as Executive Director?

Absolutely! I started writing this blog post at 5:00 AM on January 31. I am ready to go!

http://gov.georgia.gov/press-releases/2014-08-15/deal-appoints-six-boards

http://www.investgeorgia.net/board-of-directors/

Invest Georgia “Request For Proposal” for Fund Administrator

9 Feb

The Invest Georgia Executive Director and the Board Of Directors of Invest Georgia have released the “Request for Proposal” (RFP) for a Fund Administrator for the Invest Georgia Program on the official website: www.investgeorgia.net

The RFP can be found here:

http://www.investgeorgia.net/invest-georgia/invest-georgia-fund-seeks-a-fund-administrator/

Based on the 2013 Invest Georgia statute (Ga. Code Section 10‑10‑10 et seq.) the Invest Georgia Program and the Invest Georgia Board of Directors are required to select and hire a Fund Administrator. The Fund Administrator is to be selected by the Invest Georgia Board of Directors through a transparent and open bid process.

The statute can be found here:

http://www.investgeorgia.net/resources/

Questions regarding the RFP are allowed to the Executive Director through February 16, 2015 (Section X). Final applications are due to the Executive Director by email by March 6, 2015.

Contact information for delivery of the RFP application can be found on the RFP (Section XVII).

Thank you to all who are participating!

How Many “Accredited Households” Exist in the U.S. ?

30 Aug

Many of you reading this blog know how to define an “accredited investor” (aka: angel investor)

Question is, how many “angel” investors really exist in the U.S.? It’s a question, and the answer, that has eluded me for years. However, with more attention focused on angel investing these days, numbers are now easier to come by.

There are published reports (Google, etc) that will give you a number, but I wanted to determine the information using sources I can find that are reliable. Often as well, these numbers will mix the terms of individual angel investors with the term of accredited households.

First,  let’s take a look at the July 2013 GAO report to the Securities and Exchange: “Alternative Criteria for Qualifying As An Accredited Investor Should Be Considered”.

This is a 69 page report by the U.S. Government Accountability Office generally recommending that the SEC add additional qualifications in 2014 to the “accredited Investor” criteria such as “liquid investments” and the “use of a registered advisor”. However, buried in the report are some wonderful facts related to the number of “accredited “households” that exist in the U.S.

To start:

On page 18/19, we see that the GAO uses the Survey of Consumer Finances to determine that there are 118,000,000 households in the U.S.

On pages 9/10, we see that SEC uses proprietary information (dated 2007 re: page 10) to determine the percentage number of households in the U.S. that are accredited.

SEC: 

1980: 1.7% (when accredited investor status first initiated)

2007: 9.0%

2010: 7.2% (after “primary residence” was removed from qualifying criteria)

However, the GAO uses information dated 2010 (page 10).

GAO:

1980: not available

2007: 5.2%

2010: 2.8% (after “primary residence” was removed from qualifying criteria)

We can do a quick calculation using the SEC 2007 numbers and the GAO 2010 numbers to determine the estimated number of “accredited households” in the U.S..

SEC                                                 GAO

2007:  10,620,000                          2007: 6,136,000

2010:  8,496,000                            2010:  3,304,000

(statistical range +/- 15%)

So, from a 2010 high range using SEC numbers to a low range using GAO numbers, we can see that roughly 3, 300,000 and 8,500,000  accredited households exist in the U.S.

Surprised? So, how many exist in your state? Your town? And how many of these “accredited household” are active angel investors?  Those are my next posts….

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