N.Y. Urban Development Corporation Act 174/68 § 16-u: Innovate NY fund

§ 16-u. Innovate NY fund. 1. The Innovate NY fund is hereby created.

The purpose of the Innovate NY fund is to make available state funds to

eligible applicants to support emerging business ideas and products that

result in the growth of business within the state and the concomitant

creation of jobs and tax revenues for the state.

2. Eligible applicants for Innovate NY funds may include regional and

local economic development organizations, technology development

organizations, research universities, and investment funds that provide

seed-stage investments in New York state companies.

3. Funding from the Innovate NY fund may be made available to the

applicant for investment in beneficiary companies. In order to be

eligible for an investment that includes Innovate NY investment funds, a

beneficiary company must: (a) be, or agree in writing to be, located in

New York state; (b) be in the seed-stage of development, as defined by

the corporation; (c) demonstrate a potential for substantial growth and

job development in an emerging technology field, as defined in section

thirty-one hundred two-e of the public authorities law or in regulations

as adopted by the corporation; and (d) have the potential to generate

additional economic activity in New York state. Investment priority

shall be given to beneficiary companies involved in commercialization of

research and development or high technology manufacturing.

4. The corporation shall establish a competitive process for the

evaluation of applicants for the Innovate NY investment fund. Applicants

shall be evaluated on criteria including, but not limited to, the

applicant's: (a) track record of success in raising investment funds and

successfully investing them; (b) capacity to perform due diligence and

to provide management expertise and other value-added services to

beneficiary companies; (c) financial resources for identifying and

investing in seed-stage companies; (d) ability to secure non-state

matching program investment funds at a ratio that is equal to or greater

than one to one (1:1); (e) ability to evaluate the commercial potential

of emerging technologies; (f) ability to secure partnerships with local

or regional investors; (g) adoption of conflict of interest provisions

acceptable to the corporation; and (h) other criteria that the

corporation determines is relevant to making investment decisions

consistent with the purposes of the fund as set forth in subdivision one

of this section. When awarding funds pursuant to this subdivision, the

corporation shall assure that the applicants demonstrate the need for

seed capital in the areas served by the applicant and provide for

adequate geographic distribution of awards to beneficiary companies

throughout the state to the extent feasible. The corporation shall

distribute funds promptly pursuant to a disbursement process agreed to

between the corporation and applicant to enable the applicant to fulfill

commitments to beneficiary companies in a timely manner.

5. At the time the applicant has invested fifty percent of the

Innovate NY funds committed to such applicant and annually thereafter,

aggregate investments of Innovate NY funds by such applicant in

beneficiary companies shall be leveraged with private sources of capital

excluding investments after the initial funding round at a ratio equal

to or greater than two to one (2:1).

6. The Innovate NY fund shall not invest an amount in any single

beneficiary company that exceeds five hundred thousand dollars, or seven

hundred fifty thousand dollars in the case of any individual

biotechnology-related beneficiary, at any one time, subject to certain

exceptions to be established by rules and regulations of the

corporation.

7. Notwithstanding any provision of law to the contrary, the

corporation may establish a program fund for program use and pay into

such fund any eligible funds available to the corporation from any

source, including moneys appropriated by the state.

8. The corporation shall submit a report annually on December

thirty-first to the director of the budget, the temporary president of

the senate, the speaker of the assembly, the minority leader of the

senate and the minority leader of the assembly detailing (a) the total

amount of funds committed to each applicant that receives funds and the

amount of such funds that has been invested by each such applicant; (b)

the amount of Innovate NY and private funds invested in each beneficiary

company; (c) the type of product or technology being developed or

produced by each beneficiary company; (d) the location of each

beneficiary company; (e) the number of jobs projected to be created or

retained; and (f) such other information as the corporation deems

necessary.

9. The corporation is hereby authorized to promulgate rules and

regulations in accordance with the state administrative procedure act as

are necessary to fulfill the purposes of this section, including with

respect to reasonable management fees, promotes, share of return and

other fees and charges of applicants that receive funds, and to provide

for the repayment of funds received by the beneficiary company if the

beneficiary company leaves New York state within a period of time to be

established by the corporation.

10. In accordance with the rules and regulations to be promulgated by

the corporation, the corporation may impose fees, establish repayment

terms and provide for equity participation by the corporation in

connection with investments from the Innovate NY fund.

11. The provisions of section ten and subdivision two of section

sixteen of this act shall not apply to assistance provided under this

section.