BCEDA News

$100 Million of New Venture Capital:

2/18/04

The Alabama Certified Capital Company Program created six new private equity funds during the first week of February. The participants, also know as CAPCOs, in the Alabama Certified Capital Company Program were certified by the Alabama Development Office and financed by investments from insurance companies, resulting in six new sources of capital for Alabama companies. As a result, Alabama has $100 Million in new private equity dollars spread between six new funds which range in size from $11 to $20 million each.

The newly created Alabama funds closed their respective funding transactions, resulting in an extensive influx of available capital in Alabama. Each of these CAPCOs are paired with a local partner:

The CAPCO Program was enacted by the Legislature and signed into law by the Governor in April of 2002 in an effort to increase the availability of private equity funding in Alabama. The program, administered by the Alabama Development Office, is designed to promote investment in Alabama-based businesses by offering insurance companies an incentive to commit investment dollars to private equity funds that have been certified as CAPCOs.

The CAPCOs must invest this capital into a "Qualified Technology Business" (QTB), which, despite the term, includes most small businesses located in Alabama. The businesses which qualify for CAPCO investments must be headquartered in Alabama, have less than one hundred employees and engage primarily in research & development, the manufacturing, processing, or assembly of products or the provision of services.

This new investment capital will soon be available for Alabama businesses, as each CAPCO is required to meet minimum investment percentages on a set timeline. Therefore, these funds will soon be seeking investment opportunities throughout the state. This increased availability of capital stands to provide the much needed capital that so many Alabama businesses need in order to grow and remain competitive.

Unfortunately, however, the money is not unlimited, so interested companies should determine if they will qualify as a "QTB" and begin seeking out these funds. Please note that these are investment (not grant) funds. As such, interested applicants should have a business plan, financial information, and other relevant information prepared prior to contacting a CAPCO for investment.