,,ii #aacth ,,congress #ast ,session ,s4 #abhe ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #aa1 #bjac ,ms4 ,baldwin introduced the following bill2 which was read twice and referred to the ,committee on ,small ,business and ,entrepreneurship ,a ,,bill ,to amend the ,small ,business ,investment ,act of #aieh to enhance the ,small ,business ,investment ,company ,program and provide for a small business early-stage investment program4 #a4 ,short title ,this ,act may be cited as the ,small ,business ,innovation ,act of #bjac4 #b4 ,program authorization ,section #cjc7;b7 of the ,small ,business ,investment ,act of #aieh 7#ae ,u4,s4,c4 #fhc7;b77 is amended1 in the matter preceding paragraph 7#a71 in the first sentence1 by inserting after issued by such companies the following3 1 in a total amount that does not exceed #d1jjj1jjj1jjj each fiscal year 7adjusted annually to reflect increases in the ,chained ,consumer ,price ,index for ,all ,urban ,consumers 7,c-,,cpi-,u71 as published by the ,bureau of ,labor ,statistics of the ,department of ,labor74 #c4 ,family of funds ,section #cjc7;b77#b77;,b7 of the ,small ,business ,investment ,act of #aieh 7#ae ,u4,s4,c4 #fhc7;b77#b77;,b77 is amended by striking #bbe1jjj1jjj and inserting #cej1jjj1jjj4 #d4 ,small business early-stage investment program ,title ,,iii of the ,small ,business ,investment ,act of #aieh 7#ae ,u4,s4,c4 #fha et seq47 is amended by adding at the end the following3 ,d ,small business early-stage investment program #cii;,a4 ,definitions ,in this part3 7#a7 ,early-stage small business ,the term early-stage small business means a small business concern that-- 7,a7 is domiciled in a ,state or ,indian country 7as defined in section #aaea of title #ah1 ,united ,states ,code72 and 7,b7 has not generated gross annual sales revenues exceeding #ae1jjj1jjj in any of the most recent #c full years before the date on which the ,administrator makes an equity financing to a participating investment company under section #cii;,e4 7#b7 ,eligible applicant ,the term eligible applicant means-- 7,a7 an incorporated body1 limited liability company1 or limited partnership organized and chartered or otherwise existing under ,federal or ,state law for the purpose of performing the functions and conducting the activities contemplated under the program2 or 7,b7 a manager of a small business investment company4 7#c7 ,participating investment company ,the term participating investment company means an applicant approved under section #cii;,e to participate in the program4 7#d7 ,program ,the term program means the early-stage investment program established under section #cii;,b4 7#e7 ,small business concern ,the term small business concern has the same meaning given that term in section #c7;a7 of the ,small ,business ,act 7#ae ,u4,s4,c4 #fcb7;a774 7#f7 ,small business concern in a targeted industry ,the term small business concern in a targeted industry means a small business concern that is engaged primarily in researching1 developing1 manufacturing1 producing1 or bringing to market goods1 products1 or services in a targeted industry4 7#g7 ,targeted industry ,the term targeted industry means any of the following business sectors3 7,a7 ,advanced manufacturing4 7,b7 ,agricultural technology4 7,c7 ,biotechnology4 7,d7 ,clean energy technology4 7,e7 ,digital media4 7,f7 ,environmental technology4 7,g7 ,information technology4 7,h7 ,life sciences4 7,i7 ,water technology4 #cii;,b4 ,establishment of program ,the ,administrator shall establish and carry out an early-stage investment program to provide equity financing to support early-stage small businesses in accordance with this part4 #cii;,c4 ,administration of program ,the ,administrator1 acting through the ,associate ,administrator described in section #bja1 shall administer the program4 #cii;,d4 ,applications 7a7 ,requirements for application ,an application to participate in the program shall include-- 7#a7 a business plan describing how the eligible applicant intends to make successful venture capital investments in early-stage small businesses and direct capital to small business concerns in targeted industries or other business sectors2 7#b7 information regarding the relevant venture capital investment qualifications and backgrounds of the individuals responsible for the management of the eligible applicant2 and 7#c7 a description of the extent to which the eligible applicant meets the selection criteria under section #cii;,e4 7b7 ,applications from managers of small business investment companies ,the ,administrator shall establish an abbreviated application process to participate in the program for applicants that are managers of small business investment companies that are licensed under section #cja4 ,the abbreviated application process shall incorporate a presumption that managers of small business investment companies that are licensed under section #cja satisfactorily meet the selection criteria under paragraphs 7#c7 and 7#e7 of section #cii;,e7b74 #cii;,e4 ,selection of participating investment companies 7a7 ,in general ,not later than #ij days after the date on which the ,administrator receives an application from an eligible applicant under section #cii;,d1 the ,administrator shall make a determination to conditionally approve or disapprove the eligible applicant to participate in the program and shall transmit the determination to the eligible applicant electronically and in writing4 ,a determination to conditionally approve an eligible applicant shall identify all conditions the eligible applicant is required to satisfy for the ,administrator to provide final approval to the eligible applicant to participate in the program1 and shall provide a period of not less than #a year for the eligible applicant to satisfy the conditions4 7b7 ,selection criteria ,in making a determination under subsection 7a71 the ,administrator shall consider-- 7#a7 the likelihood that the eligible applicant will meet the goals specified in the business plan of the eligible applicant2 7#b7 the likelihood that the investments of the eligible applicant will create or preserve jobs in the ,united ,states1 both directly and indirectly2 7#c7 the character and fitness of the management of the eligible applicant2 7#d7 the experience and background of the management of the eligible applicant2 7#e7 the extent to which the eligible applicant will concentrate investment activities on early-stage small businesses2 7#f7 the likelihood that the eligible applicant will achieve profitability2 7#g7 the experience of the management of the eligible applicant with respect to establishing a profitable investment track record2 7#h7 the extent to which the eligible applicant will concentrate investment activities on small business concerns in targeted industries2 and 7#i7 the extent to which the eligible applicant will concentrate investment activities on small business concerns in targeted industries that have received funds from an agency of the ,federal ,government1 including-- 7,a7 the ,national ,institutes of ,health2 7,b7 the ,national ,science ,foundation2 and 7,c7 funds received under the ,small ,business ,innovation ,research ,program or the ,small ,business ,technology ,transfer ,program1 as such terms are defined under section #i of the ,small ,business ,act 7#ae ,u4,s4,c4 #fch74 7c7 ,final approval 7#a7 ,in general ,not later than #ij days after the date on which an eligible applicant satisfies the conditions identified by the ,administrator under subsection 7a71 the ,administrator shall provide final approval to the eligible applicant to participate in the program4 7#b7 ,exception ,not later than #cj days after the date on which an eligible applicant1 the partnership or management agreement of which conforms to models approved by the ,administrator1 satisfies the conditions identified by the ,administrator under subsection 7a71 the ,administrator shall provide final approval to the eligible applicant to participate in the program4 7#c7 ,revocation of conditional approval ,if an eligible applicant fails to satisfy the conditions identified by the ,administrator under subsection 7a7 in the time period required by that subsection1 the ,administrator shall revoke the conditional approval4 #cii;,f4 ,equity financings 7a7 ,in general ,the ,administrator may make #a or more equity financings to a participating investment company4 7b7 ,equity financing amounts 7#a7 ,non-,federal capital ,an equity financing made to a participating investment company under the program may not be in an amount that exceeds the amount of the capital of the participating investment company that is not from a ,federal source and that is available for investment on or before the date on which an equity financing is drawn upon by the participating investment company4 ,the capital of the participating investment company may include legally binding commitments with respect to capital for investment4 7#b7 ,limitation on aggregate amount ,the aggregate amount of all equity financings made to a participating investment company under the program may not exceed #ajj1jjj1jjj4 7c7 ,equity financing process ,in making an equity financing under the program1 the ,administrator shall commit an equity financing amount to a participating investment company1 and the amount of each commitment shall remain available to be drawn upon by a participating investment company-- 7#a7 for new-named investments1 during the #e-year period beginning on the date on which the commitment is first drawn upon by the participating investment company2 and 7#b7 for follow-on investments and management fees1 during the #aj-year period beginning on the date on which the commitment is first drawn upon by the participating investment company1 with not more than #b additional #a-year periods available at the discretion of the ,administrator4 7d7 ,commitment of funds ,not later than #b years after the date on which funds are appropriated for the program1 the ,administrator shall make commitments for equity financings4 #cii;,g4 ,investments in early-stage small businesses 7a7 ,in general ,as a condition of receiving an equity financing under the program1 a participating investment company shall make all of the investments of the participating investment company made with amounts received under the program1 including securities1 promissory notes1 or other obligations1 in small business concerns1 of which at least #ej percent of the total amount of such investments shall be in early-stage small businesses in targeted industries4 7b7 ,evaluation of compliance ,after a participating investment company has expended not less than #ej percent of the amount of an equity financing commitment made under section #cii;,f1 the ,administrator shall evaluate the compliance of the participating investment company with the requirements under subsection 7a74 7c7 ,waiver ,the ,administrator may waive the requirements for a participating investment company under subsection 7a7 if the ,administrator determines that it is in the best interest of the long term solvency of the fund established in section #cii;,j4 #cii;,h4 ,pro rata investment shares ,each investment made by a participating investment company under the program shall be treated as comprised of capital from equity financings under the program according to the ratio that capital from equity financings under the program bears to all capital available to the participating investment company for investment4 #cii;,i4 ,equity financing interest 7a7 ,equity financing ,interest 7#a7 ,in general ,as a condition of receiving an equity financing under the program1 a participating investment company shall convey an equity financing interest to the ,administrator in accordance with paragraph 7#b74 7#b7 ,effect of conveyance ,the equity financing interest conveyed under paragraph 7#a7-- 7,a7 shall have all the rights and attributes of other investors attributable to their interests in the participating investment company2 7,b7 shall not denote control or voting rights to the ,administrator2 and 7,c7 shall entitle the ,administrator to a pro rata portion of any distributions made by the participating investment company equal to the percentage of capital in the participating investment company that the equity financing comprises1 which shall be made at the same times and in the same amounts as any other investor in the participating investment company with a similar interest4 7#c7 ,allocations ,a participating investment company shall make allocations of income1 gain1 loss1 deduction1 and credit to the ,administrator with respect to the equity financing interest as if the ,administrator were an investor4 7b7 ,manager profits ,as a condition of receiving an equity financing under the program1 the manager profits interest payable to the managers of a participating investment company under the program shall not exceed #bj percent of profits1 exclusive of any profits that may accrue as a result of the capital contributions of any such managers with respect to the participating investment company4 ,any excess of manager profits interest1 less taxes payable thereon1 shall be returned by the managers and paid to the investors and the ,administrator in proportion to the capital contributions and equity financings paid in4 ,no manager profits interest 7other than a tax distribution7 shall be paid before the repayment to the investors and the ,administrator of all contributed capital and equity financings made4 7c7 ,distribution requirements ,as a condition of receiving an equity financing under the program1 a participating investment company shall make all distributions to all investors in cash and shall make distributions within a reasonable time after exiting investments1 including following a public offering or market sale of underlying investments4 #cii;,j4 ,fund ,there is established in the ,treasury a separate account 7in this section referred to as the fund7 for equity financings which shall be available to the ,administrator1 subject to annual appropriations1 as a revolving fund to be used for the purposes of the program4 ,all amounts received by the ,administrator under the program1 including any moneys1 property1 or assets derived by the ,administrator from operations in connection with the program1 shall be deposited in the fund4 #cii,k4 ,application of other sections ,to the extent not inconsistent with requirements under this part1 the ,administrator may apply sections #cji1 #caa1 #cab1 #cac1 and #cad to activities under this part1 and an officer1 director1 employee1 agent1 or other participant in a participating investment company shall be subject to the requirements under such sections4 #cii,l4 ,annual reporting ,the ,administrator shall include information on the performance of the program in the annual performance report of the ,administration required to be submitted under section #aj7;a7 of the ,small ,business ,act 7#ae ,u4,s4,c4 #fci7;a774 4