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S 753

112th CONGRESS
1st Session

S. 753

To require the Assistant Secretary of Commerce for Economic Development to establish an early-stage business investment and incubation grant program, and for other purposes.

IN THE SENATE OF THE UNITED STATES

April 6 (legislative day, April 5), 2011

Mrs. GILLIBRAND introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation


A BILL

To require the Assistant Secretary of Commerce for Economic Development to establish an early-stage business investment and incubation grant program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the `Early-Stage Business Investment and Incubation Act of 2011'.

SEC. 2. DEFINITIONS.

    In this Act:

      (1) COVERED BUSINESS INCUBATOR- The term `covered business incubator' means a public or private not-for-profit organization, including an academic institution, that--

        (A) operates a program providing assistance to early-stage businesses in targeted industries to support the development of those businesses;

        (B) has a physical location and on-site management for the program described in subparagraph (A); and

        (C) has procedures for selecting businesses for, and graduating businesses from, the program described in subparagraph (A).

      (2) DUE DILIGENCE ACTIVITIES- The term `due diligence activities' means activities carried out to analyze and assess the desirability, value, and potential of an opportunity to provide assistance to an early-stage business in a targeted industry.

      (3) EARLY-STAGE BUSINESS IN A TARGETED INDUSTRY- The term `early-stage business in a targeted industry' means a small business concern that--

        (A) is located in the United States;

        (B) has not generated gross annual revenues exceeding $15,000,000 in any of the most recent 3 years; and

        (C) is engaged primarily in researching, developing, manufacturing, producing, or bringing to market goods or services with respect to--

          (i) agricultural technology;

          (ii) energy technology;

          (iii) environmental technology;

          (iv) life science technology;

          (v) biotechnology;

          (vi) information technology;

          (vii) digital media;

          (viii) clean technology;

          (ix) defense technology;

          (x) photonics technology;

          (xi) electronic technology;

          (xii) semiconductor technology;

          (xiii) material science technology;

          (xiv) aerospace;

          (xv) communications; or

          (xvi) transportation.

      (4) OPERATIONAL EXPENSES- The term `operational expenses' means the costs of operating a covered business incubator, including overhead and management expenses.

      (5) PURCHASED SERVICES- The term `purchased services' means any training, counseling, or other assistance provided to an early-stage business in a targeted industry by a covered business incubator through an agreement with another entity, and not by the incubator directly.

      (6) SMALL BUSINESS CONCERN- The term `small business concern' has the meaning given that term in section 3 of the Small Business Act (15 U.S.C. 632).

SEC. 3. EARLY-STAGE BUSINESS INVESTMENT AND INCUBATION GRANT PROGRAM.

    (a) Establishment- Not later than 60 days after the date of the enactment of this Act, the Assistant Secretary of Commerce for Economic Development (in this section referred to as the `Assistant Secretary') shall establish an early-stage business investment and incubation grant program (in this section referred to as the `Program') to support the development of early-stage businesses in targeted industries.

    (b) Grant Authority-

      (1) IN GENERAL- The Assistant Secretary may make grants to covered business incubators under the Program.

      (2) AMOUNT OF GRANTS-

        (A) NON-FEDERAL CAPITAL LIMITATION- The amount of a grant made to a covered business incubator under the Program may not exceed the amount of the incubator's capital that--

          (i) is not from a Federal source; and

          (ii) is available for investment and incubation services on the day before the grant is awarded.

        (B) AGGREGATE AMOUNT LIMITATION- A covered business incubator may receive not more than $5,000,000 in grants under the Program.

    (c) Use of Grant Funds-

      (1) IN GENERAL- Subject to paragraph (2), a grant made to a covered business incubator under the Program may be used by the incubator--

        (A) to make an investment in an early-stage business in a targeted industry;

        (B) to provide training, counseling, and other assistance to an early-stage business in a targeted industry to support the development of the business;

        (C) to provide purchased services to an early-stage business in a targeted industry;

        (D) to conduct due diligence activities; or

        (E) to meet operational expenses of the incubator.

      (2) LIMITATIONS-

        (A) PURCHASED SERVICES- A covered business incubator may use not more than 20 percent of the amount of a grant made to the incubator under the Program to provide purchased services to an early-stage business in a targeted industry.

        (B) DUE DILIGENCE ACTIVITIES- A covered business incubator may use not more than 6 percent of the amount of a grant made to the incubator under the Program to conduct due diligence activities.

        (C) OPERATIONAL EXPENSES- A covered business incubator may use not more than 5 percent of the amount of a grant made to the incubator under the Program to meet operational expenses of the incubator.

    (d) Applications- A covered business incubator seeking a grant under the Program shall submit to the Assistant Secretary an application--

      (1) at such time and in such manner as the Assistant Secretary may require;

      (2) describing in detail the activities the incubator intends to carry out using the grant; and

      (3) setting forth the percentage of the grant funds that the incubator intends to use for each of the activities described in subparagraphs (A) through (E) of subsection (c)(1).

    (e) Grant Conditions- As a condition of receiving a grant under the program, a covered business incubator shall do the following:

      (1) FUND MANAGER- Designate an individual as the fund manager for the grant funds, who shall administer and be responsible to the Assistant Secretary for information with respect to the grant funds received by the incubator.

      (2) INVESTMENT COMMITTEE- Establish an investment committee, composed of not fewer than 5 individuals (3 of whom may not be employed by the incubator or an affiliate of the incubator or be related to an individual who owns or is otherwise responsible for the operations of the incubator or an affiliate of the incubator), that shall--

        (A) review proposals for and advise the incubator on the use of grant funds;

        (B) provide letters of support and reference to the Assistant Secretary with respect to proposals for the use of grant funds by the incubator; and

        (C) submit periodic reports to the Assistant Secretary on the results of activities carried out with grant funds.

      (3) COLLABORATOR- Assign to each early-stage business in a targeted industry that the incubator assists with grant funds a collaborator who shall--

        (A) be an individual not employed by the incubator or an affiliate of the incubator or be related to an individual who owns or is otherwise responsible for the operations of the incubator or an affiliate of the incubator; and

        (B) shall assist the incubator in providing support to the business.

    (f) Federal Share of Activities- The Federal share of the cost of an activity carried out by a covered business incubator using a grant under the Program may not exceed 75 percent of the cost of that activity.

    (g) Monitoring and Evaluation-

      (1) IN GENERAL- The Assistant Secretary shall assess the effectiveness of covered business incubators that receive grants under the Program in supporting the development of early-stage businesses in targeted industries using the data provided by covered business incubators under paragraph (2) and such other information as the Assistant Secretary considers appropriate.

      (2) DATA FROM INCUBATORS- Not later than 120 days after the date on which a covered business incubator receives a grant under the Program, the incubator shall provide to the Assistant Secretary information on the activities of the incubator and on the businesses assisted using the grant, including--

        (A) the number of jobs created by those businesses;

        (B) the amount of taxes paid by those businesses and the employees of those businesses; and

        (C) other data that the Assistant Secretary considers appropriate to determine the effectiveness of assistance provided using grants made under the Program.

    (h) Authorization of Appropriations- There are authorized to be appropriated to carry out the Program--

      (1) $250,000,000 for the first fiscal year that begins after the date of the enactment of this Act; and

      (2) such sums as may be necessary for each fiscal year thereafter.

END