Hatteras Venture Partners of Durham, N.C., has been chosen as the first firm to receive an investment from the U.S. Small Business Administration's Early Stage Innovation Funds initiative.
Hatteras is eligible to receive as much as $50 million from the SBA to invest in seed and early stage companies. The firm has already raised $88 million from outside investors, said Dennis Byrne, an SBA spokesman.
The announcement comes as state lawmakers consider putting as much as $200 million into a similar type of program to prod investment in high-potential companies that would create more jobs. Wisconsin's venture capital investment proposals have been bogged down by questions about how much money to allocate and who would manage the money, along with questions about the performance of companies involved in a previous program.
Hatteras has said it is attempting to raise a $125 million fund, which would mean it would use $37 million of the SBA funds, Byrne said. But the Durham firm could decide to use more SBA money, he added.
Hatteras was selected because it showed that it has "a strong team with a clear, focused strategy and a track record investing in an under-capitalized region," the agency said.
The SBA noted that, since 2006, less than 10% of all U.S. venture capital dollars went to seed funds, and 69% of the early-stage funding went to just three states: California, Massachusetts and New York.
The SBA has committed as much as $1 billion to the Early Stage Innovation Fund program, which it is operating with Startup America. Applicants must have experience in early-stage investing, and must invest at least half of their dollars in early-stage, small businesses. They must match the SBA funding with privately raised money.
The SBA is taking applications through March 1 from experienced early stage fund managers to participate in the program.
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