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Venture Capital Match Program Rules

Title 19
CORPORATIONS AND BUSINESS
Part VII. Economic Development Corporation
Subpart 2. LOUISIANA VENTURE CAPITAL PROGRAM

Chapter 21. Louisiana Venture Capital Co-Investment Program

2101. Eligibility

Eligible applicants are:

A. Venture Capital Funds with a minimum of $5,000,000 of privately raised capital for risk investment under management with:

1. Proven, experienced management recognized in the venture capital community. The management should have significant management experience in risk investments of the types and volumes contemplated by the applicant venture capital funds.
2. A Louisiana based production office. The production office shall have permanent employees employed by the fund capable of evaluating potential investment opportunities.
3. Funds without headquarters located in Louisiana must have a minimum of one year operating history.

B. For the purposes of this chapter "risk investment" means an investment which may provide equity through the purchase of common stock, preferred stock, partnership rights or any other equity instrument. Additionally it may mean debt positions which may act as equity or have equity features such as subordinated debt, debentures or other such instruments used in conjunction with features intended to yield significant capital appreciation.

AUTHORITY NOTE: R.S. 51:2312(c)
HISTORICAL NOTE: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:463 (June 1989), amended LR 23:

2103. Valuation of Investment Fund

The application for certification shall contain but not be limited to the following:
The amount of privately raised funds under management shall mean the value of any monies invested or otherwise used as risk capital in businesses plus the unexpended monies available for investment or used as risk capital. The value of an equity investment and/or risk capital investment shall be the amount of dollars actually invested. For the purpose of calculating private capital, only cash and commitments which are available for risk investments at the time of LEDC's match, may be counted in the match amount.

AUTHORITY NOTE: R.S. 51:2312(c)
HISTORICAL NOTE: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:463 (June 1989), amended LR 23:

2305. Application Procedure

A. The application shall contain, but not be limited to an offering memorandum which includes, but is not limited to the following:

1. Name of Fund, address (mailing and physical)
2. Specify the amount of LEDC investment/commitment requested.
3. Specify the minimum and maximum amounts of non-LEDC capital to be raised if LEDC makes the requested investment/commitment .
4. Specify Applicant's projected timetable, with milestones for completion of the fund raising.
5. Specify whether applicant anticipates taking in all of the committed capital investment at closing, or whether applicant plans a phase in. If a phase-in is planned, specify the proposed schedule. It is permissible to have different scenarios based on the actual amount of capital raised.
6. MARKET - Identify the proposed market of the Applicant.
   a. Describe and discuss the types of businesses that the Fund will finance. Discuss the extent to which the Fund intends to specialize in certain industries, or if special circumstances will be addressed.
   b. Describe the size range of businesses that it is contemplated the Fund will finance, with a general indication of where most of the focus is expected.
   c. Discuss the life cycle stage or stages of the companies which the Fund will likely finance, with an indication of where most of the focus is contemplated, e.g., start-up, expansion.
   d. Discuss the geographic area in which the Fund plans to focus. Specify the city or parish in which the Fund's principal office will be located, and discuss intentions, if any, to establish any additional offices.
   e. Describe the types of financing instruments that are intended to be utilized for investments, e.g., debentures, notes, preferred stock, royalties, etc..
7. Management Assistance - Discuss the plans of the Fund to provide management and/or technical assistance to companies for which the Fund provides financing. Discuss the Fund's plans for monitoring its financing, and enforcing provisions of loan or investment agreements. Discuss how the Fund plans to handle problem loans and investments.
8. Idle Funds - Describe plans for the management of the idle funds of the Fund.
9. Realization of Returns By Investors - Discuss long term plans and strategies for providing a tangible return to the investors in the Fund .
10. Tax and Accounting Issues - Discuss relevant tax and accounting issues for the Fund.
11. Management Structure - Describe the proposed management structure for the Fund.
12. Describe the proposed responsibilities of each of the members of the management team. If any of these people will not be full time, describe their other activities.
13. Describe the responsibilities of any management position for which a person has not been identified.
14. Specify any other key people including any advisors, consultants, attorneys and accountants, and submit resumes and/or descriptions of firms. LEDC reserves the right to perform general and criminal background checks on these key people.

AUTHORITY NOTE: R.S. 51:2312(c)
HISTORICAL NOTE: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:463 (June 1989), amended LR 23:

2307. Amount of Investment

The Corporation may invest up to $5,000,000. The Corporation may use its discretion to set the ratio of Corporation investment to private investment. However, the ratio shall not exceed one dollar of Corporation monies to two dollars of privately raised dollars.

AUTHORITY NOTE: R.S. 51:2312(c)
HISTORICAL NOTE: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:463 (June 1989), amended LR 23:


2309. Investment Criteria

The criteria for investment may include but not be limited to the following:

A. The applicant will be required to make a best effort attempt to invest in Louisiana businesses.
B. The investment made by LEDC shall be made on no less than the same terms and conditions, and with the same expected return on investment, as other private investors.

AUTHORITY NOTE: R.S. 51:2312(c)
HISTORICAL NOTE: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:463 (June 1989), amended LR 23:

2311. Reporting Requirements

Funds receiving investments under this program shall submit quarterly and annual financial and narrative reports on the use of monies and all investments made by the Fund during the reporting period. The narrative report shall include the number of applications received in addition to other activities. The narrative report shall include a listing of all investors in each business and all subsequent financings.

AUTHORITY NOTE: R.S. 51:2312(c)
HISTORICAL NOTE: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:463 (June 1989), amended LR 23:

2313. Inactivity

If no activity has occurred in the Fund for a period of one year or reporting requirements are not met, the Venture Fund shall be reviewed by the Board of the Corporation. After review the Board may choose to revoke its investment.

AUTHORITY NOTE: R.S. 51:2312(c)
HISTORICAL NOTE: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:463 (June 1989), amended LR 23: