capital

In the second quarter (Q2) of 2013, venture investment totaled $6.7 billion over 913 deals, according to the quarterly survey by PricewaterhouseCoopers (PWC) and the National Venture Capital Association (NVCA). Compared to the first quarter of 2013, the amount of venture capital investment increased 12 percent and the number of deals increased 2 percent. Although still well below venture capital investment highs in 2007, Q2 2013 had the largest total amount of investment in a year.

During a recent public hearing, the Securities and Exchange Commission (SEC) adopted a new rule that moves equity-based crowdfunding one step closer to reality. As mandated by the JOBS Act (see the March 28, 2012 issue of the Digest), the new rule will allow companies to publicly advertise, market and disclose the fact that they are fundraising. However, the sale of securities is still restricted to accredited investors and the company must take reasonable steps to verify that all purchasers are accredited.

Between FY03-11, the U.S. Department of Treasury's Community Development Finance Institutions (CDFI) Fund supported $26.4 billion in private investment through the New Market Tax Credits (NMTC) program, according to data released by the fund. The CDFI Fund helps economically distressed communities leverage private investment capital by offering investors a federal tax credit.

Over the last week, several states have announced/passed new programs focused on increasing the capital available to spur small business growth and innovation. Officials from New Jersey announced the state's new angel tax credit will take effect July 1. In Arizona and Wisconsin two bills await gubernatorial approval that would rework the Arizona R&D tax credit program and establish a $75 million venture capital fund in Wisconsin. Meanwhile, the Minnesota state legislature did not approve an additional $5 million for its popular Small Business Investment Tax Credit.

Since 2011, three states (Kansas, Georgia and North Carolina) have enacted securities exemptions that allow their state's entrepreneurs and small businesses to raise up to $1 million dollars via the sale of securities to residents of the state — Washington lawmakers introduced similar legis

The Department of Energy's guaranteed loan program has made headlines as automotive company Tesla paid back over $450 million in federal loans nine years ahead of schedule. Tesla's move highlights the potential of federal loan programs to support the growth of renewable energy industries by investing in companies that are developing new technologies such as lithium batteries and electric cars.

Both venture capital dollars invested and total deals declined in the first quarter of the year, according to the PricewaterhouseCoopers/National Venture Capital Association (NVCA) Moneytree survey. The capital-intensive life science and clean technology sectors were particularly hard hit, along with seed and early stage investments. Within the data, however, a number of bright spots remained for entrepreneurs seeking capital. Seed and early stage investments continue to comprise more than 50 percent of all deals and first-time fundings remain within a healthy range.

Last week, the SSTI Weekly Digest offered an overview of the many TBED-focused tax incentives currently under consideration in a number of state legislatures. Tax credits for research and development and for angel capital investment, in particular, appear to be under consideration in many parts of the country. At the same time, there appears to be a renewed emphasis on transparency in the operation and effectiveness of these kinds of tax credits.

Measuring impact is critical to the success and sustainability of any economic development initiative, and as the national debate over fiscal austerity and taxpayer spending continues, TBED organizations can expect increased scrutiny and accountability for their investments.

In the January 2011 edition of the Harvard Business Review, Michael Porter and Mark Kramer called for a redesign of the existing business model and their role within society. Instead of simply embracing corporate responsibility and corporate giving, businesses should work to create shared value within their community by helping to support local clusters and institutions to address societal needs and issues.