Va. receives $230M for startup, venture capital funding
Money comes from federal State Small Business Credit Initiative
Virginia has been approved for as much as $230.4 million in federal funds to accelerate startups, the U.S. Department of Treasury announced Tuesday.
The money comes from the Treasury’s State Small Business Credit Initiative (SSBCI). Virginia will operate five programs, including two loan participation, one loan guarantee and two equity/venture capital programs. Loan programs include $57 million for small businesses and $173.4 million was allocated for equity/venture capital programs.
The credit lending and early-stage equity financing programs will provide Virginia businesses with increased access to public and private capital, especially around underrepresented communities and entrepreneurs, Gov. Glenn Youngkin said in a news release.
“Startups and small businesses are critical to our future and job creation. This initiative will expand our existing funding programs for companies with high potential for rapid growth and significant economic development,” Youngkin said. “We must have an economy that encourages innovation and entrepreneurship across the commonwealth because new businesses create opportunities that lift up all Virginians.”
The funding is expected to spark up to 10 times the private investment for every $1 of SSBCI capital spent, according to Youngkin’s office. The Virginia Small Business Financing Authority (VSBFA) will expand credit support and technical assistance to small businesses through the SSBCI program. The Virginia Innovation Partnership Corp. will co-invest equity alongside matching private capital in Virginia startups while exploring opportunities and supporting organizations within Virginia’s entrepreneurial ecosystem. The aggregate SSBCI funds will be disbursed in three separate tranches based on the achievement of specific criteria objectives.
About $57 million of the SSBCI funding will be allocated to VSBFA, the state’s business and economic development financing arm, and is aligned within Virginia’s Department of Small Business and Supplier Diversity, which provides loans to Virginia businesses for economic growth and expansion.
“The technical assistance program included in the SSBCI will benefit very small businesses, which have 10 employees or less, and those that are owned and controlled by socially and economically disadvantaged individuals,” VDSBSD Director Willis Morris said in a statement.“These companies often have difficulty securing the funding that is needed to grow their enterprises. We are committed to doing our best to empower the opportunities that very small startups need.”
The remaining $173 million will be allocated to VIPC, the operations arm of the Virginia Innovation Partnership Authority. VIPC will use the money to expand its current seed and early-stage direct co-investment program for Virginia-based technology startups, which is managed through VIPC’s Virginia Venture Partners division. VVP will also initiate a new indirect investment program through SSBCI funding that enables limited partner capital commitments to emerging and established seed investment funds in order to further support startup growth and stimulate risk capital infrastructure within Virginia’s entrepreneurial ecosystems.
“The SSBCI funding will enable VIPC to increase its support for the vibrant entrepreneur community that exists across Virginia,” VIPA Board Chair Barbara Boyan said in a statement. “VIPC is there at every step of the commercialization process, from business validation to revenue generation, which helps entrepreneurs build financially viable and stable companies.”