The fund will help commercialize emerging technologies and put NYS on par with states like Pennsylvania, California, Maryland and Texas in terms of directly supporting entrepreneurial development. Investment decisions by the Fund will be made by independent, professional investors and state funds will require matches of at least 1:1 from federal or private sources to leverage and maximize the impact of State investments.
The proposal is currently aimed at technology being developed at colleges and universities, but as it is developed, it is essential to expand it beyond university-based research to fully capture the promise of the innovation economy. In structuring the fund, it is important to note that promising technologies have also come from talented young entrepreneurs working in garages and warehouses, seasoned technologists who have transitioned from legacy industries, and industry spin-offs that have proven to be the gazelles of the innovation economy. (Apple was founded by two college drop-outs with $1,300 in angel investment in 1996, went public in 1980 and became the first personal computer company to reach $1 billion in sales by 1982. Amazon's founder transitioned out of a Wall Street career in 1994, put together a small equity raise with angle investors and took the company public in 1997. Google was started by young entrepreneurs in a garage in Menlo Park in 1998, seeded by a private angel investment from the co-founder of Sun.)
In the past several years, early stage funding has been a critical funding challenge for entrepreneurs, especially as the venture capital community is increasingly interested in more mature companies experiencing rapid growth and larger deals. Recognizing the potential of early stage companies with promising technology, many states have addressed this gap by creating co-investments programs.
Best practice recommendations being adopted by many states now include:
- Helping establish and support regional angel networks statewide and expanding investor education about emerging technology sectors
- Providing financial incentives to encourage angel investment, and implementing metrics to measure results
