Section 395.6 - Challenge grants for seed capital funds(a) Purpose.--The board is authorized to award challenge grants for the purposes of establishing seed capital funds to assist young small businesses, including businesses in incubators, to create new jobs in this Commonwealth.(b) Application.--Advanced technology centers or other organizations approved by the board may submit applications to receive challenge grants to assist in establishing seed capital funds. Each application shall: (1) Describe the purposes of the proposed seed capital fund, including the types of businesses to receive investments and the types of investments to be made, consistent with subsection (c).(2) Explain the need for the challenge grant in attracting private investment to the proposed seed capital fund.(3) Present a plan for establishing the proposed seed capital fund, including the amount of private investment sought, the strategy for obtaining such investments and the persons or organizations who may manage the fund.(4) List private investment commitments obtained to date.(c) Use of funds.--The board may award challenge grants to eligible applicants following receipt of an application consistent with the criteria specified in this act. Recipients of grants shall not expend any of the funds awarded unless and until the board has assured itself that the following conditions hold: (1) Either: (i) at least $3 of private investment has been committed to the proposed seed capital fund for every $1 of the challenge grant awarded and at least $3,000,000 of total investment, including the challenge grant, has been committed to the proposed fund; or(ii) at least $1 of private investment has been committed to the proposed seed capital fund for every $1 of the challenge grant awarded; at least $1.5 million of total investment, including the challenge grant, has been committed to the seed capital fund; and no investment is to be made from the fund in a small business project without an equal or greater investment from private sources other than the fund in the same small business project, such that, in total, at least $3 of private investment has been committed to an individual small business project for every $1 of challenge grant funds invested.(2) Investments from the seed capital fund will be made exclusively in small businesses located in this Commonwealth, including, but not limited to, tenants of incubators. For the purposes of this section, small businesses shall not include businesses of a mercantile or services related nature, but shall include international export related services, international export related mercantile ventures and advanced technology or computer related ventures which will increase the Commonwealth's share of domestic or international markets.(3) Total investments in a small business using seed capital funds should ordinarily be less than $250,000 during any round of financing for a small business.(4) The grant recipient shall serve as a limited partner or coinvestor with limited liability in the proposed fund and returns on investment of challenge grant funds shall be reinvested in the seed capital fund. In the event that recipients of funds cannot demonstrate these conditions by June 30, 1986, the grants, or the portions thereof for which the conditions are not satisfied, shall be rescinded by the board and shall be available to the board to use for loans and loan guarantees to incubators consistent with section 4.
1984, July 2, P.L. 555, No. 111, § 6, imd. effective.