Method
At the heart of this system is a method for catalyzing the formation of new funds, then facilitating careful investing by fund members. These funds will be Wyoming based angel funds and seed funds. The WSCN will help sustain these investors as they analyze, value, price, structure, negotiate, make and monitor their projects, while at the same time helping them connect with national sources of technology, capital and business‐building talent. The program will operate as a network whereby individual funds will be encouraged to partner with other funds when considering investments, leveraging the knowledge, connections and capital among the groups.
Targeted Impact: 10 to 1 and higher
Each $1 invested by the WSCN in an angel or seed fund will typically be matched by $4 from private investors. As these funds invest in companies, individual angels will typically co‐invest an equal amount. As some companies succeed and grow they will attract capital from later stage venture investors and lenders. The WSCN will seek to achieve $10 to $1 leverage by 2017, and to double this ratio over time.
Evergreen Fund
The WSCN will operate as an evergreen fund. Assets will be invested, recovered, and reinvested multiple times through two programs, helping small business of all types.
The Collateral Support Program (CSP) helps banks make more than $100 million in working capital loans to small businesses or all types by pledging CDs as additional cash collateral for up to 50% of the loan amount. The Collateral Support Program will work with commercial banks, credit unions and Community Development Financial Institutions across the state. Lenders will find borrowers they would like to support, but that lack sufficient collateral. If a loan meets the program criteria WSCN may extend a guarantee by pledging a Certificate of Deposit (CD) to the lender as additional collateral for the loan. A 1-2% origination fee is applied to the total amount of the loan being supported. Origination fees are returned to the program to help offset program costs, and thereby extend the life of the program.
The Seed Capital Network Program (SCN) creates a ready resource for Wyoming’s entrepreneurs, and makes a big impact on the State’s economy. Angel investors form the bridge between early development and the later rapid growth phases of an emerging business, filling critical gaps in financing. An active network of angel investors in a region can help drive the opportunity for entrepreneurs find the capital they need to grow and prosper. For Wyoming, the WSCN will form new angel funds by matching SSBCI funds with new, private capital, mobilizing private capital and raising the level of sophistication of seed and angels investing in the state. The Seed Capital Network Program will complement and support Wyoming’s existing entrepreneurial ecosystem by building the number and capacity of private seed funds and angel funds that help build Wyoming businesses from the ground up.
The Opportunity for Economic Development Organizations
An economic development organization is a candidate for this opportunity if the community is encouraging entrepreneurial development, if the community lacks adequate sources of equity capital to support entrepreneurs, and if the community wishes to host a new fund in the region. There is no required cost or commitment of capital on the part of the economic development organization.
WSCN is a statewide program headquartered in Laramie. That means that no matter where you are located, your Economic Development Organization can take advantage of this important capital tool for your small business clients. Find out how you can add WSCN to your economic development toolbox by contacting today via email or by calling Diane Wolverton, Exec Director of WSCN at 307-760-7373.