Governor Hochul Announces Launch of $30 Million Pre-seed and Seed Matching Fund Program
Thursday, January 5, 2023
Source: Empire State Development
Governor Kathy Hochul today announced the launch of the $30 million Pre-Seed and Seed Matching Fund Program, which will offer early-stage start-up companies $50,000 to $250,000 in growth assistance which they will match with funds from private sector co-investors. The program will support the development of businesses in high-growth industries and the creation of 21st century jobs. Funding for the program comes from the State Small Business Credit Initiative, part of the federal American Rescue Plan, to support small businesses, especially those owned by socially and economically disadvantaged individuals and very small businesses which traditionally do not receive sufficient access to capital or support.
"For early-stage startup companies, access to capital is critical to ensuring the vitality of those businesses and sustaining them in the long term," Governor Hochul said. "The Pre-Seed and Seed Matching Fund Program will help these businesses gain their footing and create the jobs of the future while expanding access to funding in traditionally underserved communities. I thank our federal partners for helping to secure this funding and extending a lifeline to New York's small business ecosystem."
Empire State Development President, CEO and Commissioner Hope Knight said, "Even companies that are a household name now, started out as just an idea. Through the Pre-Seed and Seed Matching Fund Program, we will target promising startups and very small businesses and ensure that these good ideas become a reality in New York State, especially in traditionally underserved populations and markets."
The Program is managed through Empire State Development's NY Ventures, the state's venture capital arm, and will be focused on technology markets including advanced manufacturing, agricultural tech, climate tech, consumer tech, data/SaaS/AI, fintech, healthcare, Life Sciences and BioTech, and medical devices. Pre-seed funds are typically the hardest venture capital funds to access for new high-growth businesses, which is why NY Ventures is offering them through this program. To qualify, applicants must have raised less than $2 million of dilutive funding to date. All applicants must be registered to do business in New York State and agree to create economic impact in New York by having headquarters and at least one C-suite employee in state.
There will be a focus on expanding access to venture capital across New York State, particularly for historically marginalized individuals, including entrepreneurs of color, and underserved regions. There will be a focus on expanding access to venture capital across New York State, particularly for historically marginalized individuals, including entrepreneurs of color, and underserved regions. According to the VC Capital Survey which was conducted by NVCA, Venture Forward, and Deloitte, in 2020, only 3 percent of investment partners were Black or African American, only 4 percent were Hispanic or Latino, 15 percent were Asian or Pacific Islanders and only 16 percent of investment partners were female. Additionally, a study from RateMyInvestor and DiversityVC found that less than 10 percent of VC dollars go to women founders and less than 1 percent go to Black founders.
For more information on the program and instructions on how to apply, visit, https://esd.ny.gov/pre-seed-and-seed-matching-fund-program.
Senate Majority Leader Charles Schumer said, "This new program, which is part of a $500 million federal investment I secured for New York, is the shot in the arm the state's small businesses need to recover from the pandemic and rebuild our local economies. I am proud to deliver this boost to help support underserved businesses, invest in entrepreneurs and small businesses in key industries like manufacturing and technology, and create good-paying jobs in the communities that need them most. As majority leader, I fought to secure the State Small Business Credit Initiative federal investment as part of the American Rescue Plan to meet the unprecedented challenges faced by the nation's small businesses during the pandemic and I am proud to now deliver this federal funding for New York to build up the state's small businesses and manufacturing base to accelerate our recovery, and drive our economy into the future."
Representative Gregory W. Meeks said, "I applaud Gov. Hochul's commitment to the entrepreneurs of our state through the Pre-Seed and Seed Matching Fund Program announced today, which marks a substantial investment opportunity for the entrepreneurs of our state. Thanks to the American Rescue Plan signed into law last Congress, the funding provided helped to create this public-private partnership that will empower start-ups to grow and scale, specifically those who have been historically passed over by traditional venture capital. The entrepreneurial spirit of New York and the people of my district is alive and well, and thanks to this new program, more young companies will be given an opportunity to succeed."
New York State has been awarded more than $500 million in federal SSBCI funding, including a total of $219 in equity funding to be used for: an additional $35 million for NY Ventures' Innovation Venture Capital Fund, $30 million for a new Pre-seed and Seed Matching Fund Program, $102 million for a new Emerging and Regional Partner Program Fund for diverse and emerging fund managers, and $52 million for a new Community and Regional Partner Program Fund for accelerators, venture studios, and incubators. The remaining $282 million funds are supporting a variety of Capital Access programs. Funding will be distributed to ESD from the US Treasury in three tranches as funds are committed. Find out more about ESD's SSBCI programs at https://esd.ny.gov/ssbci.
New York Ventures includes several programs that help support and address the funding needs of start-ups in high-growth innovation fields like clean energy, advanced manufacturing, health care, life sciences, and agricultural tech. This includes a direct fund that has supported more than 60 Seed to Series B start-ups across the state- 70 percent of which are minority- and/or woman-led -- and have received matching funds of more than $70 million. New York State also supported the development of 81 companies and the creation of 2,000 jobs through the Innovate New York Fund and launched a MWBE Investment Fund to provide seed equity capital to certified minority- and women-owned businesses. For more information on NY Ventures, visit https://esd.ny.gov/venture-capital.