Advisory Committee Guiding Principles

Subchapter D funds (Incentives for Commercialization)

Per Legislation, Subchapter D Monies are for:

Incentives for private or non profit entities to collaborate with public or private universities on emerging technology projects with a demonstrable economic benefit to the state.

Priority for funding:

Involving emerging scientific or technology fields that have a reasonable probability of enhancing the state's national or global economic competitiveness
May result in a medical or scientific breakthrough
Are collaborative
Are matched with other funds
Have a demonstrable economic benefit to the state
- Claw back if entity fails to perform a required action or meet milestones
- Guarantee of commercialization or manufacturing in Texas

Guiding principals of ETF 17 member advisory committee and RCIC's:

Initial Portfolio Strategy

$25M for pre seed (~$100K to ~$750K - first money in)
Ave deal ~$500K = 50 deals in yr 1
$25M for early stage (~$500K to ~$2.5M, not to exceed $5M)
Ave deal $1M = 25 Deals in yr 1
Total = ~75 deals per year

Preferred MATCH with hard equity (non founder, not in-kind)
Preferred deals that can NOT be covered by other public policy mechanisms/funds
State prefers to follow same terms as lead investor
Preponderance of jobs must pay > $18/hr
Other economic benefits must be identified by entity and tracked by RCIC
% of payback can go to RCIC(s) that sponsored the deal.
Fund can reinvest twice in same company, but not in same year and only if meeting milestones (still to follow a lead investor with match)
Use score sheet criteria for deciding which deals get recommended.
RCIC can "bank" deal quota if not fully used each quarter (max amount = two quarters worth) However, first come, first served for approved deals.