capital

Angel investment activity continues to recover from the crash that hit startup capital markets in late 2008, according to the latest report from the University of New Hampshire's Center for Venture Research (UNH CVR). During the first half of 2012, the number of ventures receiving angel funding grew by a modest 3.7 percent over the same period in 2011. Healthcare remains the dominant target of angel investments, comprising about a quarter of angel dollars into the first half of the year.

Voters in 37 states will decide on more than 170 ballot measures this year, many of which are related to tech-based economic development (TBED). Tax measures seem to be dominating ballots this year, with questions relating to both decreases and increases for sales, property and income taxes. Several states are counting on voters to agree to temporary increases to help fill budget deficits and ensure steady funding for education.

On September 17, 2012, the U.S. Patent and Trademark Office (USPTO) implemented seven provisions of the Leahy-Smith America Invents Act of 2011 (AIA) including:

In the first half of 2012, venture capitalists invested $13.1 billion in 1,707 deals, according to data from the quarterly survey conducted by PricewaterhouseCoopers (PWC) and the National Venture Capital Association (NVCA). This represents a marked decline from the first half of last year, when investors completed 1,942 deals with $14.7 billion. Though activity picked up in the second quarter (Q2) in 2012, both deals and dollars remained lower than the same quarter last year.

Borealis Ventures and the New Hampshire Business Finance Authority recently announced the creation of the Borealis Venture Fund, an early stage venture capital fund that will support the states's high-tech startups. Borealis Ventures will manage the fund, which is being backed by $4.5 million through the federal State Small Business Credit Initiative. The firm plans to raise an additional $25.5 million from private investors.

Governments of advanced economies are starting to believe as the 21st century advances significant opportunities for their technology-based product and service sectors will emerge from increasingly open, competitive and affluent global markets. To compete in this changing world, they are looking to expand access to capital for startups and entrepreneurs, support their research and development (R&D) infrastructure and address weaknesses in their national economies.

The Michigan Economic Development Corporation (MEDC) announced last week five new programs under the Pure Michigan Business Connect initiative established last year to provide small businesses in emerging industry sectors with economic development incentives, startup capital and support services (see the June 8, 2011 issue of the Digest).

The new programs focus mostly on providing access to capital and making connections. They include:

A program envisioned nine years ago as a $1 billion endowment that would transform Oklahoma into the research capital of the Great Plains was eliminated last week by the legislature. The Economic Development Generating Excellence Fund, or EDGE Fund, which provided grants to high-tech companies, was unable to secure a long-term financial commitment from the state following an initial appropriation of $150 million in 2006. The balance of the fund, about $161 million, will be transferred to Oklahoma universities for the endowed chairs program to fund academic positions and research.

The Small Business Administration (SBA) is now accepting the first stage of the licensing process for the new five-year $1 billion Early Stage Small Business Companies (Early Stage SBICs) initiative. In 2012, the SBA may commit up to $150 million to support eligible investments funds focused on early/seed stage investments.

While touting broad support from lawmakers for his 2012 legislative agenda during the regular session, Gov. Bob McDonnell also expressed concern about several economic development and education initiatives left out of the 2012-14 biennial budget passed by lawmakers during a special session that ended last month. Just in time for the deadline, Gov. McDonnell submitted $43.9 million in budget amendments, which include restoring funds for research, life sciences and teacher recruitment.