Venture Capital

The ECIDA Financing Group supports increased private investment that expands or retains employment in Erie County. Technology-based companies have been identified as priorities for future growth in the county and region. The development and continuation of such companies is dependent on the availability of near-equity and equity seed, start-up and growth capital. The ECIDA Financing Group will consider funding for start-up, early stage and expansion stage companies that offer above average opportunities for growth in revenues, net income and net worth, and which are expected to provide long-term growth in the regional employment base. In general:

• Initial loan/investment will be between $100,000 and $300,000 with a maximum [for smaller loans, click for link to Western New York Business Development Fund].
• A company must have its principal business location and the majority of its employment in the Erie County labor market area. Funding for businesses not in Erie County can be considered provided a substantial benefit to Erie County can be demonstrated and the neighboring county matches the funding to be provided.
• Funding must be 40% or less of the total being funded at the present time. Due diligence will not begin until the other funding sources have been identified and expressed interest.
• Loan/investment will not exceed $100,0000 per full-time job to be created over a three-year period.
• Borrower must be eligible under ECIDA Financing Group guidelines.
• Funding may not substitute for private capital or other financing when available on commercially reasonable terms and conditions.
• Loans may be for up to 10 years. Possible initial principal and/or interest payment deferral period not exceeding half the loan term may be available.
• Loans will generally require warrants or other non-equity kickers.
• Personal guarantees by the principals and collateral liens may be requested but are not mandatory.

An eligible company will be a new or existing for-profit business which has a technology product or service that is already substantially developed and expected to generate commercial revenues within 12 months. Specific applicant eligibility will be determined in accordance with the approved guidelines for the ECIDA Financing Group's various funding programs. Preference will be given (1) to companies based on technologies developed at local colleges and universities, medical and research facilities, and (2) to businesses that have previously received venture funding from other public agencies.

Restrictions

Generally, funds cannot be used to move existing jobs into or out of the local labor market area.

Application Procedures

Initial feasibility determination will be made upon review of a business plan. The plan should discuss the items listed below under Business Plan Guidelines. The next step is agreement on the general terms and conditions of the requested funding. Once the applicant accepts the Term Sheet, due diligence review begins. The review will be conducted by staff and consultants, as appropriate. When the due diligence results in a recommendation for approval, the request is submitted for review and/or approval by the Investment Review Committee and Board of Directors.

Business Plan Guidelines

A Business Plan should include information in at least the following areas. Additional information to supplement the application may be requested at any time.

• Request: amount and purpose of the funding requested, other project funding sources (with copies of terms sheets) and uses
• Background: history and nature of the business, names of subsidiaries and other businesses in which the applicant has an ownership interest
• Management: resumes of key management personnel. Due diligence will include submission of Individual Background Investigation forms on all key management and officers of applicant.
• Product: description of the technology/product concept, importance to the projected market niche(s) and intellectual protection, key suppliers.
• Marketing Data: information on the market size and growth rate of the niche(s) targeted, specific customers and geographic areas targeted, detailed comparison of the company to its competitors, specific projected marketing budget for next 2 years.
• Sales Strategy: how company will reach and support the market with specific budget for next 2 years.
• Manufacturing/Operations Issues: who will manufacture the product, description of operations.
• Financial Data:
  • 3 or more years of historical balance sheets and operating statements, if available, along with federal tax returns as filed
  • interim financial statements for current and immediately preceding comparable periods
  • projected post-closing balance sheet
  • 3 or more years of projected balance sheets, operating statements and cash flow statements
• Due Diligence Authorization Letter (click here)
• To request additional information regarding Venture Capital (click here)