The Small Business Administration has authorized the first private investment firm to take part in a new program aiming to provide more financial assistance to promising start-up companies.
Hatteras Venture Partners, a Durham, NC-based venture capital firm, becomes the first federally licensed Early Stage Investment Fund, a distinction born out of the Obama administration’s recent expansion of the SBA’s Small Business Investment Company (SBIC) program. Through the initiative, the agency provides matching capital to private investment firms that back young and small businesses.
More than a half-century old, the SBIC program previously targeted traditional “Main Street” small businesses but not high-growth start-up companies, which research over the past few years has shown are responsible for the bulk of the nation’s new jobs each year. So as part of a broader initiative to deliver more help to young firms that included the launch of Startup America, President Obama announced a $1 billion SBIC fund for firms that invest in seed- and early-stage businesses.
“The Early Stage Innovation Funds initiative promotes American innovation and job creation by encouraging private sector investment in early stage small businesses,” SBA Administrator Karen Mills said in a statement. “And by licensing funds like Hatteras Venture Partners IV, we can expand entrepreneurs’ access to capital at no cost to taxpayers.”
The SBA can designate up to $50 million in government-backed capital to investment firms approved for the program, and in order to qualify as one of the new Early Stage Innovation Funds, groups must invest at least half of their capital in early-stage ventures. Licensed investors are then regulated by the SBA.
With more than $250 million currently under its management, Hatteras Venture Partners makes most of its investments in early-stage businesses in the southeastern portion of the country, with a focus on industries such as biopharmaceuticals, medical devices and healthcare technology. In a statement on Monday, Clay Thorp, a partner at the firm, said he expects the SBIC license to give Hatteras “the depth of capital required to be a strong financial partner for all of our portfolio companies.”