Seed Capital

The statute creating a seed capital program through OCAST has been on the books for many years. However, the Legislature provided funding for Fiscal Year 2007, and OCAST for the first time was able to set up a program through a competitive proposal process. The result was a new Oklahoma Seed Capital Fund LLC, managed by i2E Inc., a not-for-profit corporation, under contract to OCAST. This organization has a strong history of providing commercialization services for Oklahoma high-tech entrepreneurs and has successfully operated the OCAST Technology Business Finance Program.

The new Oklahoma Seed Capital Fund is now operational and accepting applications.

For general information about the seed capital fund, see the information below.

• Seed Capital Fund statute
• Oklahoma Seed Capital Fund Overview
  • Eligible Firms. Oklahoma high-tech firms (start-ups or existing firms seeking to diversity) that are engaged in producing an innovative product or service with a strong growth potential are eligible for potential fund investment.
  • Definition of High-Tech Firms. High-tech firms are defined as those engaged in the design, development, and introduction of new products and/or innovative manufacturing processes through the systematic application of scientific and technical knowledge. [From “High-technology employment: a NAICS-based update” by Daniel E. Hecker, Monthly Labor Review, July 2005]
  • Business Stage. Firms must be in the seed capital stage of development and classified as small in accordance with SBA standards (usually no more than 500 employees).
  • Size of Investment. The level of private sector seed capital investment varies widely – in general from as low as $250,000 to as much as $750,000 or more. It is anticipated that total deal amounts for investments by the Oklahoma Seed Capital Fund will generally be in that range. However, each applicant will be evaluated on a case-by-case basis to determine the optimum funding level.
  • Type of Investment. The fund will generally invest in the high-tech firm by taking an equity position (stock), or through debt, or both.
  • Co-Investment. Firms must be able to demonstrate that they are potentially attractive to private co-investors.
  • Economic Development Goals. The Oklahoma statute creating the seed capital funding emphasizes the necessity for such investment to have the high potential for positive impact on the Oklahoma economy through the creation of higher-than-average-wage jobs that will stay in the state.
  • Statutory Requirements for Seed Capital Investments by the fund.
    • Investment by the fund must be instrumental to the success of the high-tech company, be reasonably expected to assist in its retention within the state, and be reasonably expected to enhance employment opportunities within the state.
    • The entrepreneur and other founders of the high-tech company must have already made, or be contractually committed to make, an appropriate financial and time commitment to the company.
    • The company must commit to provide adequate reporting of financial data to the fund and agree to prudent observation or representation by the fund on the governing body of the company.
    • The fund’s investment must be used for the development, refinement, and/or commercialization of a product, process or innovation.
    • The company receiving seed capital investment by the fund must use commercially reasonable efforts to cause the product, process, service, or commercial application which results from the fund’s investment to be developed or produced by an Oklahoma-based firm, or to apply such outcomes in a manner that has reasonable potential to create or enhance employment or other factors contributing to economic growth within Oklahoma.

    For more information, contact:

    Oklahoma City Office i2E Inc. 840 Research Parkway, Suite 250 Oklahoma City, OK 73104 Phone: 405-235-2305 Fax: 405-235-2252 Toll Free: 800-337-6822 www.i2e.org

    Tulsa Office i2E Inc. 618 E. Third Street, Suite 1 Tulsa, OK 74120 Phone: 918-582-5592 Fax: 918-582-3392 www.i2e.org