Vermont Seed Fund Recapitalization Update
By VCET President David Bradbury
This past week Governor Phil Scott signed the Vermont state budget which concluded a months long effort in Montpelier for policymakers to allocate early stage equity capital support to entrepreneurs as part of the Vermont recovery plan. Early on there was confusion and language to sort out to be an eligible use under the CRF conditions. That language and format resolved in September but ultimately proved unsuccessful.
At the end, we sought only $5M ( 0.4% out of $1.25 billion total) for targeted business grants and equity warrants into technology enabled companies whose financing was impacted by COVID. Alas, we failed. A strange and expedited legislative process this year made it all the more difficult for sure, but the issue was heard, considered and ultimately denied fairly in the process. Though disappointed in the outcome, I have nothing but thanks and appreciation to the Housing Commerce and Senate Economic Development Committees for their time and consideration and to the Agency of Commerce and Community Development (ACCD).
Perhaps the encouraging news will be in this next round of Economic Recovery Grants by ACCD where it may accept evidence of pulled term sheets, angel investors backing out or predatory bank / investor terms during COVID as now qualifying as a “loss” or “injury” under this program. No guarantees that this will happen but the financing issues of these young, growing companies were heard and this perhaps “softened” up the process enough to now be considered. Let’s hope so.
For Vermont’s near term future, entrepreneurship is our best case business model that needs to be seeded and nurtured. These high growth, technology enabled companies who sell most of their services and goods to out of state customers can grow more quickly, add more great paying jobs and help employ the structurally displaced workers from sectors that will not bounce back anytime soon into sectors that are growing today. First time founders and companies seeking the first outside investors are finding it tougher than ever. Vermont needs to do better here in funding and incentivizing more early stage equity investments across the board. We will continue to play our role as direct investors, forming capital syndicates and advising startup founders and scaling companies on the path forward.
To all the supporters and advocates for this #RecapTheSeedFund effort – thank you and let’s keep after it.
Vermont Seed Capital Fund, LP
Vermont Center for Emerging Technologies (VCET)