The Venture Acceleration Fund:
- Supports job growth in northern New Mexico
- Provides unique financial support
- Has an established process that generates results
- Understands and supports the diverse range of high-tech, manufacturing and rural companies in New Mexico
- Focuses on early-stage tech/manufacturing companies, and also supports established, growth-oriented firms
- Has a strong mentoring and support network in place
The Venture Acceleration Fund (VAF) is the only non-dilutive local source of seed financing for very early stage technology and manufacturing startups in Northern New Mexico.
The funding fills a unique niche in that it supports technology-based and manufacturing companies that lack collateral for debt financing and are not ready for Angel or Venture Capital funding.
The call for VAF applications goes out once a year, typically in February, and the application submittal deadline is in March. Maximum funding amounts, eligibility requirements, and terms and conditions are subject to change each year.
VAF applicants and awardees receive assistance from a variety of business expansion and retention programs including New Mexico Small Business Assistance Program (NMSBA), Los Alamos National Laboratory (LANL) and the Regional Development Corporation (RDC).
About the VAF
Purpose: The VAF fund seeks to improve the economy of Northern New Mexico by providing a unique source of funding to companies who are on track to add jobs, grow revenues, or attract follow-on investment.
VAF Funding: VAF financing is useful for companies that are not ready for equity investment, but unable to get bank financing. It is also useful for companies who will not need additional investment but can use a one-time cash infusion to achieve growth goals.
In 2018 the maximum award size will be $60,000. Projects are often funded at a lower amount than requested. In 2016 and 2017, the median award size was $41,000. Previous VAF awardees are not eligible to reapply.
Companies selected for VAF do not give up any equity by accepting the funding. Repayment is made in the form of providing mutually agreed upon support to northern New Mexico’s startup community. The award must be repaid upon the company:
- being acquired
- leaving the state
- failing to provide the mutually agreed upon annual support to northern New Mexico’s startup community
The “payback” is designed to help grow the fund so that in the future, more companies can be awarded and the fund will become independent of the need for regular fundraising.
Application and Selection Process:
Applications are due at Close of Business on March 12, 2018. Once the application period is complete, a panel of reviewers evaluates the applications and selects a subset of companies to present their projects in person. The format is generally a brief presentation followed by Q&A. In 2018, these presentations will occur in early April. The review panel then selects awardees from this group. Awardees will be notified in late April and work on contract milestones and deliverables begins in May. The review panel consists of entrepreneurs, previous VAF awardees, investors, and economic development experts.
Industry: Technology-driven or manufacturing companies are eligible to apply for VAF.
Stage: Although the bulk of companies awarded VAF funds tend to be less than 2 years old, an established company can apply as long as it can show why VAF funding is more appropriate than traditional financing such a lines of credit, loans, etc. and if it can tie receipt of VAF funding to a major impact (such as entering a new market, significantly growing jobs or revenues, etc.).
Presence in Northern New Mexico: VAF will only accept applications from companies located in Los Alamos, Santa Fe, Sandoval, Taos, Rio Arriba, Mora, and San Miguel counties.
Market traction: Companies must show that there is a viable market for their product. VAF will not fund R&D projects for which no real commercial application can be shown.
Regional Impact: The purpose of VAF is to help build the economy in Northern New Mexico by creating jobs, growing the tax base, or otherwise bettering the community financially.
Team: We want to know that the right people are on board (or that you know what skills are missing and have a plan for obtaining them).
Milestones: VAF will not fund general development work. Each proposal must outline concrete tasks that the funding will help achieve (and show how these milestones advance the commercial progress of the company). Payment is only made once a milestone has been completed.
Matching Funds: Companies must show that they are willing to provide a match—in the form of either money or an in-kind contribution of labor, etc.—for every dollar they request from VAF.
Connection to Los Alamos National Laboratory: Because this fund was originally developed by Los Alamos National Laboratory (LANL), we will give a preference to companies who have licensed LANL IP, were founded by LANL employees, or who participated in a New Mexico Small Business Assistance (NMSBA) project with LANL.
Previous VAF Awardees: Companies who were previously VAF awardees are not eligible to apply for follow-on funding in the spring 2018 VAF call. This policy is revisited each call based on the size of the fund.
The VAF is a collaborative investment founded by Los Alamos National Security, LLC (LANS) in 2006. This year LANS, along with Los Alamos County, New Mexico Manufacturing Extension Partnership (MEP), and the City of Santa Fe are investing in the economic health of New Mexico via their support of growth-oriented companies. The fund is administered by the Regional Development Corporation of Española, New Mexico (www.rdcnm.org).
- Be a for-profit business headquartered or having substantial operations* in one of the following NM counties: Los Alamos, Santa Fe, Sandoval, Taos, Rio Arriba, Mora, or San Miguel
- Be a technology** or manufacturing company
- Have already started work on the business, not just have an idea (company DOESN’T have to have revenues, just be able to show what has been achieved so far)
- Have already formed a corporate entity (LLC, C-corp, etc.)
- Ability to demonstrate that there is a market for the product and that the company can be successful in entering the market
- Ability to positively impact the economy of Northern New Mexico (via adding jobs, tax revenues, facilities, etc.)
- Ability to provide a “match” for all VAF dollars (either via cash or via an “in-kind” investment of time and/or materials)
- Ability to identify a specific project with key tasks or milestones to be achieved with VAF funds. The VAF does not fund general operating expenses.
- Have not previously received a VAF award in past years
- Demonstrate that the company pays gross receipts tax and have the majority of their assets located in one of these seven counties
*The company must be able to demonstrate that it pays gross receipts tax and have the majority of its assets located in one of these seven counties.
**Note: “technology” implies that the company has an innovation (often protected by trade secret, “know-how” or intellectual property), NOT that the company uses technology or provides a non-proprietary technology service such as web development.
Although not absolutely required, preference will be given to those companies that (in addition to the required elements):
- Have a co-founder or team (as opposed to a single individual)
- Have at least one person working more than 75% of their time in the business
- Are “economic base” (i.e. plan to receive a significant amount of their revenue from out of state)
- Can show how VAF money (rather than debt or equity) is uniquely suited to their needs. In many cases, it can be a compelling argument if the company can show how VAF funding will help obtain equity or debt in the future. The argument will be less compelling if the company has already raised substantial money or if the project is something that could be financed by a bank or microlender.
- Have an association with LANL Technology or Expertise. A LANL association can be established by the company being founded by former LANL employees, commercializing a licensed LANL technology, or having participated in the NMSBA (New Mexico Small Business Assistance Program) through LANL. (Note: Licenses must be executed and in compliance before any VAF funds can be allocated.)
Confidentiality/Conflict of Interest
As a matter of convention and practicality, confidentiality agreements are not signed as part of the VAF program; however, access to the applications is only granted to the VAF Team, VAF funders, and the review panel, all of whom realize that applications must be treated as sensitive. If this is a concern, before submitting the application, confirm with appropriate advisors or legal counsel that any intellectual property and/or proprietary company information described in the application is appropriately protected. We expect that most entrants will be able to present a compelling business case without divulging unprotected proprietary information. We will also ask reviewers to disclose any companies that they may have a financial interest in to assess conflict of interest.
Companies selected for VAF will sign a no interest loan with the RDC that is forgivable in five years if certain criteria are met. The loan will be paid back through mutually agreed-upon support and/or services to Northern New Mexico’s startup community. Within the agreement is a payback trigger whereby, as a condition of funding, companies will need to agree to pay the then unpaid funds in full plus a premium equal to 100% if the company is acquired, leaves New Mexico, or fails to provide the required payback support to other startups. The purpose of this “evergreen” component is to help make the fund sustainable in order to support future entrepreneurs. Companies will begin to be evaluated the year after they completed their VAF to determine if they meet any of the criteria for a repayment. If they do, a repayment plan will be developed between the company and the RDC.
The term of a VAF is typically up to 12 months from the time the loan agreement is finalized with RDC. Projects may be eligible for no-cost extensions. The award will be paid incrementally based upon completion of the project milestones with one advance payment of no more than 20% of the total award to begin work.
Please note that VAF monies cannot be used to pay for internal LANL projects, or to pay for LANL staff performing work at LANL. LANL licensees must currently be in compliance with all license requirements to be eligible for VAF funding.
Awardees are encouraged to discuss implications of the funding with their attorney and/or accountant.
At a minimum, a VAF recipient is expected to produce and submit two types of reports over the term of the project:
- Periodic oral and/or written reports to track progress against milestones. This includes a final report, for which 10 percent of the total award will be withheld until satisfactory completion.
- Success stories to share with other entrepreneurs, companies, venture capitalists or strategic partners.
VAF recipients are expected to complete the project as described in the statement of work within the loan agreement. Recipients unable to complete performance within the proposed schedule and cost may be granted an extension at the discretion of fund administrators but shall not be entitled to additional incremental funding. Failure to meet scope, schedule, and funding terms of the project may negatively affect future proposals submitted by the recipient under later announcements. The RDC retains the right to cancel agreements for failure to meet scope, schedule, funding terms, or to satisfactorily submit required milestone deliverables and progress reports. The awarded company is required to report on jobs, revenues and investment during the funding engagement, and annually for 5 years afterwards.
Conditions of VAF Program
The RDC reserves the right to:
- Request additional information to assist in the review process
- Require new proposals from interested parties
- Fund any proposal in full or in part
- Reject any or all proposals responding to this announcement
Note: Eligibility, funding amounts, and terms and conditions are subject to change each year.
For more information about the Venture Acceleration Fund, please contact: firstname.lastname@example.org.
2017 Partner Funders
- Los Alamos County
- New Mexico Manufacturing Extension Partnership (MEP)
- Santa Fe County
- City of Santa Fe
- VAF Companies That Have Paid Back Awards