CIT Initiative Addresses Capital "GAP" for Early-stage Tech Companies

Virginia's Center for Innovative Technology (CIT) announced on Monday a new investment initiative to help close the capital gap for the state's early-stage technology businesses. CIT, a state-chartered nonprofit corporation, will launch the Growth Acceleration Program (GAP) on Dec. 15, 2003, to address the funding void created by a recent shortfall of angel capital.

CIT's GAP will invest up to $100,000 in early-stage technology companies that successfully complete a seven-step investment process. All GAP investments will take the form of convertible notes with outstanding principal and interest converting to a CIT equity position in the firm at the time of a qualifying financing event. CIT may attach warrants to GAP investments as a function of loan term, interest rate and payment schedule.

Under the program guidelines, any Virginia-based company involved in communications, biotechnology, information technology, nanotechnology, materials or sensors would be eligible for GAP funding. Eligible companies must have a high-potential prospect for commercialization and follow-on funding and be able to match requested funding on a one-to-one basis.

The process of reviewing and evaluating potential GAP investment candidates will be conducted by CIT staff. CIT's Investment Advisory Board will review CIT evaluations and make the final investment decisions.

"A key challenge for entrepreneurs is finding the early-stage funding necessary to convert technologies into business opportunities," said Peter Jobse, CIT president. "CIT's GAP funding will provide critical pre-seed and seed-level capital necessary to move Virginia's most promising technologies from the proof-of-concept stage to the marketplace."

CIT will implement an investment screening process in mid-December, followed by a statewide kickoff in early 2004. More information on CIT's GAP fund is available at: http://www.cit.org/gap-04.asp