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Accessing Capital: News from the South

March 16, 2001

While venture capital is harder to come by these days in most parts of the country due to the dot-com crash and stock market declines, investment capital may flow more easily in two southern states based on two initiatives.

Florida: $450 Million for CAPCOs Considered

The state legislature is currently considering CAPCO legislation to triple the maximum limit for tax breaks granted to insurance companies that invest in Florida companies through venture capital funds. Senate Bill 1130, passed unanimously in the Banking and Insurance committee this week, now moves to the Commerce and Economic Opportunities Committee for consideration. More information is available at: http://www.leg.state.fl.us/Welcome/index.cfm

Tennessee: $12 million Raised for New SBIC

According to a March 15 article in the Tennessean, the Tennessee Technology Development Corp. (TennesSeed) and Technology 2020 have raised $12 million to serve as seed capital for tech start-ups in the state. The University of Tennessee’s endowment contributed $1 million to the investment pool.

The organizations hope to leverage the money with 2:1 match from the Small Business Administration’s Small Business Investment Company program. The article says plans are to invest in two to three companies per year, during the next five years. Typical investments will range between $500,000 and $3 million, a level that is difficult to receive from venture capitalists because the average VC deal nationally is now $10-13 million.