Virginia will receive $230.4 million in federal aid to boost small businesses and entrepreneurs with loans and venture capital for startup technology firms, especially those in underserved communities.
The initiative is part of the American Rescue Plan Act, which President Joe Biden signed early last year, to help small businesses recover from the COVID-19 pandemic and promote equitable investments in minority-owned companies that historically have had less access to financial capital to establish themselves.
“Virginia is for innovators — we see it every day,” said Sen. Tim Kaine, D-Va., who joined in the White House announcement of the federal aid to Virginia on Tuesday.
People are also reading…
The announcement came six weeks after Kaine appeared with Secretary of the Treasury Janet Yellen — who oversees the new State Small Business Credit Initiative through the Department of Treasury — at the Virginia Innovation Partnership Corp. in Herndon to tout federal investment in technology companies.
“We spent time talking to innovators from all over the commonwealth,” Kaine said.
The Richmond-based corporation, formerly known as the Center for Innovative Technology, and the Virginia Small Business Financing Authority will administer five new loan and venture capital programs under the federal initiative.
Gov. Glenn Youngkin, whose office was represented at the White House announcement, estimated the federal funds would attract 10 times the amount of private investment for every $1 spent by the program.
“Start-ups and small businesses are critical to our future and job creation,” Youngkin said in a statement on Tuesday. “This initiative will expand our existing funding programs for companies with high potential for rapid growth and significant economic development.”
“We must have an economy that encourages innovation and entrepreneurship across the commonwealth because new businesses create opportunities that lift all Virginians,” he added.
Yellen, in an announcement by the Treasury Department on Tuesday, called the initiative “an historic investment in entrepreneurship, small business growth, and innovation through the American Rescue Plan that will help reduce barriers to capital access for traditionally under-served communities.”
The treasury department will provide $57 million for two loan and one loan guarantee programs for small businesses in Virginia. The biggest part of the initiative is $173.4 million to fund two new investment programs: one for seed and early-stage technology companies and the other for venture capital firms that invest in entrepreneurs in underserved communities in Virginia.
“We have a unique economic culture in this country that encourages innovation and risk-taking,” said Kaine, who recalled working in his father’s small iron-working business in Kansas.
Under the initiative, the state small business financing authority will offer loans and credit support, as well as technical assistance to small businesses. The authority employs four regional lending managers to work with small businesses to “help create jobs and retain jobs,” grants manager Cheryl Bostick said on the White House Zoom call announcing the initiative.
The Youngkin administration said the technical assistance program will help businesses with 10 or fewer employees and those owned by “economically disadvantaged” Virginians, such as racial and ethnic minorities.
“These companies often have difficulty in securing the funding that is needed to grow their enterprises,” said Willis Morris, director of the Virginia Department of Small Business and Supplier Diversity. “We are committed to doing our best to empower the opportunities that very small startups need.”
The innovation partnership corporation, now headquartered in Richmond but still operating at the iconic CIT building near Washington Dulles International Airport, already has a long track record of investing in startup technology and early-stage technology firms.
Conceived 40 years ago by then-Gov. Chuck Robb and reorganized in 2020 under then-Gov. Ralph Northam, the corporation will use the money to match private investments in startup technology companies. The federal aid also will allow the corporation’s Virginia Venture Partners division to invest in established funds to provide venture capital to startup companies.
The funding will allow the corporation “to increase its support for the vibrant entrepreneur community that exists across Virginia,” said Barbara Boyan, dean of the Virginia Commonwealth University College of Engineering and chair of the Virginia Innovation Partnership Authority.
The corporation “is there at every step of the commercialization process,” Boyan said, “from business validation to revenue generation, which helps entrepreneurs build financially viable and stable companies.”