New York State Lands a Fresh $45 Million for Seed-Stage Startups

According to a new SEC filing, Innovate NY — a New York state -focused fund of funds has raised a fresh $45.3 million from the federal government.

How did New York get so lucky? Looks like Governor Andrew Cuomo first applied for the funding last year through the State Small Business Credit Initiative, with the money arriving in September 2011, as part of the Small Business Jobs Act that President Obama signed into law in 2010.

Federal officials initially approved $26 million so that the state could “support innovation, job creation, and high growth entrepreneurship” in New York. Since then, the capital — pooled under the moniker Innovate NY — has been disbursed in $4 million to $5 million increments to six New York-based outfits that themselves back startups: Canrock Ventures, an early-stage venture firm in Hicksville, NY; Cayuga Venture Fund, a stage-agnostic firm in Ithaca, NY; Excell Partners, an economic development partnership established in cooperation with the University of Rochester and the State of New York to fund companies in upstate New York; Golden Seeds, a New York City-based investment firm that primarily backs women entrepreneurs; SCP Buffalo Incubator, which is being newly established to fund both Internet and life-science focused startups in Western New York; and Stonehenge Capital Company, a specialty finance company in New York City.

In exchange for the state’s help, each funding recipient agreed to secure at least a two-to-one match from private sources; they also agreed not to pour more than $500,000 into any one company or, in the case of a biotech-related startup, more than $750,000.

It’s probably too soon to know how well the program is faring. I haven’t been able to reach anyone affiliated with Innovate NY. I also don’t know if the government is the only sponsor of Innovate NY’s new capital. (The SEC listing says there are two investors.)

Either way, a doubling of the amount of money being deployed by Innovate NY in just thirteen months’  time is notable and seems to suggest that state and federal officials are feeling encouraged about how the program is going thus far. Maybe they’re also looking to Pennsylvania and specifically to Ben Franklin Technology Partners, a successful state-funded economic development initiative that’s been investing in private companies since 1983.

By the way, for firms interested in learning more about what Innovate NY is looking to do and where it’s looking to invest, Kerwin Tesdell is listed as “managing GP of GP” on Innovate NY’s SEC filing. (He’s the only individual whose name appears on the filing, in fact.)

Tesdell, according to his LinkedIn bio, is the is president of the Community Development Venture Capital Alliance, an association of venture capital funds that provide equity, as well as jobs and “entrepreneurial capacity” in low-income urban and rural communities around the world. Tesdell is also an adjunct professor at NYU, teaching double bottom-line finance at the Stern School of Business and community development at the university’s law school.

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