There’s much more to a new North Carolina Senate bill than crowdfunding. it includes revised details about the “Small Business Venture Fund” that could mean as much as $100 million for startups and emerging companies.

But there are several limits, including limits on how much can be invested in Triangle companies.

Companies also must report less than $5 million in annual revenues and have a North Carolina “nexus.”

And at least 20 percent must go to companies owned by veterans.

As WTW reported earlier Thursday, three Republican Senators filed the crowdfunding legislation as part of the “Prosperity & Econ. Opportunity For All N.C. Act.” or Senate Bill (SB) 826.

Senators Rick Gunn, Ralph Hise and Harry Brown are the “primary sponsors.”

Far down in the text, or “Part III,” are the details about the investment fund. It would be overseen by the State Treasurer and draw from the “Escheat Fund.” According to the Treasurer’s website the state currently holds “approximately $438 million in the unclaimed property fund.”

Who can be funded – and where

The bill stakes out clear guidelines for what companies are eligible, from ownership to location.

Requirements include:

  • “Such assets shall be allocated to small business ventures (i) with a North Carolina nexus; (ii) of various sizes, growth potential, and industry classifications to maximize opportunities for reasonable return on investment, accounting for risks associated with similar types of investment, and to provide capital and growth opportunities for small business enterprises typically underserved by ordinary venture capital and investment funds; and (iii) that diversify investment risk and maximize the number of business ventures that may benefit from the Fund.”

Here are definitions of terms included in the above passage:

  • “North Carolina nexus. A business has a North Carolina nexus if it is headquartered or domiciled in this State; has a demonstrable and significant portion of its affiliated operations or contractual service operations in this State; or deploys a demonstrable and significant amount of investable capital to acquire, license, or otherwise commercialize intellectual property developed in this State, including through public or private university technology transfer programs.
  • “Small business. A small business is a business whose annual receipts, combined with the annual receipts of all related persons, for the applicable period of measurement did not exceed five million dollars ($5,000,000).”

Where can the funds be invested?

  • “No more than thirty‑three percent (33%) of such assets may be allocated to business ventures located in urban regions in the State, including the counties of Wake, Durham, Mecklenburg, and Orange.”

There’s help for veterans:

  • “At least twenty percent (20%) of such assets shall be invested in business ventures started and owned, in at least majority part, by a veteran of any branch of the Armed Forces of the United States (i) whose character of service at separation was honorable or under honorable conditions and (ii) who has not been convicted of a felony offense or who has been convicted of one or more felonies but each conviction has been expunged.”

And investments will be limited to $20 million a year.

  • “The maximum amount for total annual investments, excluding rollover investments, made in any single calendar year is twenty million dollars ($20,000,000). No investment may be made that, when considered together with other investments made during a single calendar year, excluding rollover investments, could cause the State’s total annual investments during a single calendar year to exceed twenty million dollars ($20,000,000). A rollover investment equals the difference between the maximum allowed investment amount for a single calendar year and the amount actually invested for such year.”

Inside the bill

Here are some other key points:

  • “It shall be the duty of the State Treasurer to invest the cash of the funds enumerated in subsection (a) of this section in excess of the amount required to meet the current needs and demands on such funds. The State Treasurer may invest the funds as provided in this subsection. If an investment was authorized by this subsection at the time the investment was made or contractually committed to be made, then that investment shall continue to be authorized by this subsection, and none of the percentage or other limitation on investments set forth in this subsection shall be construed to require the State Treasurer to subsequently dispose of the investment or fail to honor any contractual commitments as a result of changes in market values, ratings, or other investment qualifications. For purposes of computing market values on which percentage limitations on investments in this subsection are based, all investments shall be valued as of the last date of the most recent fiscal quarter.”


  • “The State Treasurer shall engage a third‑party professional actuary or consultant to conduct a valuation and projection of the financial status of the Escheat Fund. The associated costs for the services may be directly charged to the Escheat Fund. …

The amount::

  • With respect to assets of the Escheat Fund, in addition to those investments otherwise authorized by this subdivision, up to one hundred million dollars ($100,000,000) of such assets may be invested as authorized under G.S. 147‑69.2B.”

Who runs the fund?

“The State Treasurer shall assign professional and clerical staff to assist in the oversight of the Fund. All costs for the third‑party investment management firm and the professional and clerical staff shall be borne by the Fund …

Who makes the investments?

  • “[F]following a public procurement process, a designee of the Governor, a designee of the State Treasurer, a designee of the Speaker of the House of Representatives, and a designee of the President Pro Tempore of the Senate shall jointly and unanimously select a third‑party professional investment management firm, registered with the U.S. Securities and Exchange Commission, to administer the Fund and select investment opportunities appropriate for receiving allocations from the Fund on the basis of potential return on investment and the risks attendant thereto.”

Read more about the bill at: