HomeMy WebLinkAbout10. 16-353JULY 12, 2016 16-353 RESOLUTION
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PURPOSE: APPROVE CAPITAL CATALYST MATCHING FUNDS FROM
ECONOMIC DEVELOPMENT REVOLVING LOAN FUND
INITIATED BY: DEPARTMENT OF COMMUNITY DEVELOPMENT
WHEREAS the Greater Oshkosh Economic Development Corporation (Greater
Oshkosh) and the City of Oshkosh recognize the need for a targeted funding initiative to
assist startups and entrepreneurs in greater Oshkosh; and
WHEREAS Greater Oshkosh submitted a grant application to Wisconsin
Economic Development Corporation (WEDC) under the Capital Catalyst Program for a
1:1 matching grant to help entrepreneurs and companies with startup costs; and
WHEREAS Greater Oshkosh approached the City to provide the matching grant
funds from the City’s Revolving Loan Fund should a grant be awarded by WEDC; and
WHEREAS Wisconsin Economic Development Corporation awarded Greater
Oshkosh a $125,000 grant under the Capital Catalyst Program to Greater Oshkosh; and
WHEREAS the $125,000 matching funds from the City’s Revolving Loan Fund is
needed to complete the $250,000 Capital Catalyst Fund and comply with WEDC program
requirements.
NOW THEREFORE BE IT RESOLVED that the Common Council of the City of
Oshkosh hereby approves reallocating $125,000 from the Economic Development
Revolving Loan Fund Manual to match a $125,000 grant from WEDC to create a Capital
Catalyst Program Fund and the proper City officials are hereby authorized to enter any
documents necessary for purposes of same and to take those necessary steps to
implement said program.
Oshkosh
TO: Honorable Mayor and Members of the Common Council
FROM: Allen Davis, Community Development Director
DATE: July 7, 2016
RE: Approve $125,000 in Capital Catalyst matching Funds from Economic
Development Revolving Loan Fund
BACKGROUND
The Wisconsin Economic Development Corporation (WEDC) is offering grant funds
through the Capital Catalyst Program to local Economic Development agencies to help
entrepreneurs and start -up companies in their service area. The Greater Oshkosh
Economic Development Corporation (GO -EDC) approached the city with the idea to
leverage a portion of the City's Revolving Loan Fund in order to obtain WEDC funds for
start -ups and emerging companies. The Long Range Finance Committee and City staff
have reviewed the proposal and support the concept.
ANALYSIS
The WEDC Capital Catalyst program is a $1 WEDC to $1 local matching grant program
for funding. The request to use $125,000 from the RLF will be doubled by the WEDC
grant of $125,000. In this way, the City's $125,000 will leverage another $125,000 in
additional funds immediately. Additional private investment will multiply that city
investment again. WEDC has awarded the $125,000 grant to GO -EDC with the condition
that the local match is documented prior to the disbursement of the WEDC grant funds.
The WEDC program summary is attached.
There are a few critical points:
• WEDC funds could be used with the company as grant funds, loan funds or equity
stakes in the companies or any combination. The City's RLF match would be
used as loans.
• GO -EDC could apply for more WEDC grant funds if the $250,000 Capital Catalyst
program is invested within 18 months.
• The program will be used to target the same types of businesses that are best
fits for Oshkosh — advanced manufacturing, aviation and aerospace, information
technology, software etc.
• This funding program may also prove crucial in recruiting entrepreneurs to
Oshkosh from UW- Oshkosh Aeroinnovate and other entrepreneur programs.
Both the GO -EDC RLF Committee and the GO -EDC Board of Directors have
recommended support of using $125,000 from the RLF to match the WEDC grant.
FISCAL IMPACT
The City's RLF has about $2.4 million in the fund. The $125,000 match to the WEDC
grant is about 5.2% of the total available and will not affect the RLF's ability to invest in
other job creation or retention projects.
RECOMMENDATION
The City Council approves the $125,000 in Revolving Loan Funds to match the $125,000
in WEDC Capital Catalyst grant funds.
Respectfully Submitted,
Allen Davis
Community Development Director
Approved,
Mark Rohloff
City Manager
Capital Catalyst http : / /inwisconsin.com/in side -wedc /transparency /programs /capital- cat...
E
Capital Catalvst
Capital Catalyst
Program Description:
The Capital Catalyst program provides matching grants to seed fluids managed by local communities and
other eligible entities to provide capital to high- growth startups and emerging growth companies.
Program Goal:
The Capital Catalyst program is designed to stimulate capital investment at a local and regional level, to
support R &D- to- commercialization, and to increase the number of high potential start -ups in the state.
The program supports the following WED core strategy:
Strategy 5: Accelerate entrepreneurship and innovation in Wisconsin through aggressive development of
R &D and early -stage capital availability and managerial talent development.
The Capital Catalyst program increases the availability of capital to startups and emerging growth
companies to support growth and attract additional private investment.
Eligibility Requirements:
Applicants for Capital Catalyst funds must demonstrate organizational capability, the availability of
entrepreneurial support to achieve the goals of their program, and experience administering mentoring
programs. Capital Catalyst fund recipients may include communities, organizations or other entities.
Applicants should have an established investment/selection committee, investment/funding criteria, and
application process. Eligibility for the program requires a 1:1 match of the amount of funding provided by
WEDC. This match must be documented prior to the disbursement of funds.
Investment/funding decisions will focus on assistance to companies in industry sectors including but not
limited to advanced manufacturing, agriculture or food processing, information systems or software,
medical devices, biosciences and energy.
Use of Funds:
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Capital Catalyst
http: / /inwisconsin. com/ inside -wedc /transparency /programs /capital- cat...
Capital Catalyst recipients will contract directly with WEDC and are required to make grants, debt,
royalty -based investments and/or equity investments in startups, early stage and emerging growth
companies that are located in or will locate in Wisconsin. Recipients will agree to utilize a segregated
account to receive direct grant funding from WEDC that may include the recipient's matching funds.
Capital Catalyst recipients may be required to provide at least one -third of the amount of WEDC funds as
grants to companies in amounts per company not to exceed 10 percent of the total amount of WEDC
funding provided to the fund. Under that condition, a company may receive from the Fund a grant that
exceeds 10 percent of the total amount of WEDC funding provided to the Fund if non -WEDC funds are the
source of the amount exceeding that threshold. The remaining two - thirds of WEDC funds may be used to
make grant, debt, royalty -based investments or equity investments.
WEDC funding may not be used for grants, loans or investments in real estate, retail or hospitality industry
businesses, including restaurants. Any amount of non -WEDC funding used for investments in these
industries will not apply to the match requirement of the Capital Catalyst recipient.
Investment decisions of the seed fund are solely the responsibility of the Capital Catalyst recipient's
investment/selection committee in accordance with both the investment criteria approved by WEDC and
the terms of the contract with WEDC.
Terms of agreements regarding investment/funding decisions, including grants, loans and loan repayments,
royalty -based financing arrangements and equity positions, are entered into by the Capital Catalyst
recipient, not WEDC. While not a contractual obligation of Capital Catalyst, the program anticipates that
equity, royalty -based and debt investments will develop into an evergreen fund owned and managed by the
Capital Catalyst recipient as companies are sold, revenues are generated or loans are repaid.
Returns on loans and /or investments to the fund capitalized by WEDC and matching funds may be used
only for additional awards to eligible businesses, reasonable administrative expenses of the recipient and/or
other purposes approved by WEDC's E &I Vice President. Returns may not be distributed to an individual
or for - profit entity that was a source(s) of matching funds prior to the end of the final performance
reporting period.
Capital Catalyst recipients must require companies, as a condition of receiving a grant, loan or investment
from the Fund, to provide the fund with information on employment, salaries and wages and capital
leverage on a periodic basis after receiving the grant, loan or investment.
WEDC funds must be committed to the Capital Catalyst recipient. within 18 months of the date of the
disbursement of WEDC funds to the Capital Catalyst recipient.
Capital Catalyst recipients may be asked to provide occasional assistance and counsel, at WEDC's request,
to communities and other entities receiving similar WEDC funding in order to help drive a statewide
initiative of entrepreneurial support.
Incentives and Available Funding (FY16): $2,000,000
The program provides grants to approved Capital Catalyst recipients that establish seed funds and meets
the eligibility requirements of the program.
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Capital Catalyst
Expected Outcomes:
http: / /inwisconsin. com/ inside -wedc /transparency /programs /capital- cat...
This program is expected to contract with five Capital Catalyst recipients, support the financing of 55
startup and emerging growth companies, and impact 70 jobs. The program will maintain an average
co- investment ratio of 1:1 and a further leverage ratio from company financing of 3:1.
Performance Reporting:
WEDC will track the following metrics:
o the number of WEDC awards made to Capital Catalyst recipients
o the number of businesses receiving investments /grants from the funds
o the type ( grant /loan/royalty- based/equity) and amount and source of each investment
o the level of full -time and part-time employment
o the dollar amount of additional capital investments
o monthly wages paid
Capital Catalyst recipients will be required to provide periodic reporting that will include:
o a balance statement of investment/grant funds
o the number of awards made from the fund
o the recipient of each award including company name and location, CEO /owner name, company
description and industry sector
• the type ( grant /loandroyalty- based/equity) and amount of each award, corresponding to the balance
statements of investment/grant funds
• the current level of full -time and part-time employment for each company
• dollar amount of additional capital investments raised in the most recent full calendar year by each
company by type (grant/ debt /royalty- based/equity)
• current monthly wages paid by each company
Capital Catalyst recipients will also be required to report on any changes to the investment/selection
committee, fund management, application process /criteria, or funding strategy /selection criteria made since
the execution of the contract or the previous reporting period, as well as information detailing the amount
and use of returns on investments and/or loan repayments, if applicable.
Report frequency will be quarterly for the first 24 months following the date of award of WEDC funds.
Each report will include information on businesses that received an award from the Fund in that quarter. In
addition, four annual reports, beginning with the calendar year in which the first award is made by the
Fund, will include updated information on each business that received an award from the Fund. All
contracts with Capital Catalyst funds will be reviewed to ensure compliance with contract deliverables.
Application and Awards Process:
Applicants for Capital Catalyst program funding are required to provide to WEDC, in writing, information
on the applicant organization, investment fund management and strategies, and the process for approving
awards made from the fund.
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Capital Catalyst
http : / /inwisconsin. com/inside -wedc /transparency /programs /capital- cat...
Applicants must provide information to the satisfaction of E &Y vice president before being approved for
Capital Catalyst funds. The application will be assigned to an underwriter and go through the management
review process.
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