More than a dozen private equity funds to invest $2.8 billion in over 1,000 critical technology startups and small businesses
WASHINGTON, Oct. 22, 2024 (GLOBE NEWSWIRE) — Today, Administrator Isabel Casillas Guzmanthe head of The US Small Business Administration (SBA) and Secretary Lloyd J. Austinthe head of US Dept secretariat of Defense (DoD) announced 13 funds approved to be licensed by SBA under the Small Business Investment Company’s Critical Technology Initiative (SBICT), a joint DoD and SBA initiative to attract and scale private investment in critical technology areas for economic and national security made possible by SBA’s historic modernization of its Small Business Investment Company (SBIC) program under the Biden-Harris Administration, which created a new SBA government-guaranteed “Accrual Bond” loan for private investment funds . The 12 firms managing the 13 funds collectively plan to raise $2.8 billion in private equity matched with SBA-guaranteed loans to invest in over 1,000 innovative startups and small businesses developing technologies from advanced space materials and hypersonic technology .
“SBA and DoD entered into this historic initiative to leverage SBA’s long-standing SBIC program and its recent transformations so that we can ensure America maintains its global competitive edge in critical technologies.” said SBA Administrator Guzman. “These strong early results and expanded investor network will provide America’s innovators, manufacturers and supply chains with the vital funding needed to meet challenges and advance our national and economic security.”
“This first round of SBICCT Initiative funding represents an important milestone in demonstrating the power of public-private partnerships to build sustainable advantages by growing and modernizing our supply chains, strengthening our economic and national security, and benefiting developing and commercializing critical technologies that are key drivers of our U.S. industrial base,” said Heidi Shyu, Under Secretary of Defense for Research and Engineering. “I am proud of the collaborative work between the Office of Strategic Capital (OSC) and our SBA OII colleagues to establish and advance this important program.”
Funds licensed by the SBA under the SBICCT Initiative are eligible for access to SBA-guaranteed loans designed to increase investment returns at the fund level. Licensees have access to up to $175 million in SBA Debenture loans through the SBIC program. New calculated bond loans match longer duration cash flows and equity-oriented investment strategies that tend to invest in innovative new technologies and SBA benchmark bonds for a long time consistent with lending strategies . Through the SBICCT Initiative, licensed funds also gain access to initiatives and benefits offered by DoD in connection with the program that are intended to drive value in each Licensee’s fund investment portfolio.
The SBICCT initiative was announced by Defense Secretary Lloyd Austin and SBA Administrator Isabel Guzman in December 2022. Through this first-of-its-kind partnership, DoD’s Office of Strategic Capital (OSC) and SBA’s Office of Investment and Innovation (OII) – are intended to increase private investment in critical technologies, including component-level technologies and manufacturing processes vital to U.S. economic and national security interests.
The SBICCT initiative officially launched and began accepting SBIC applications in the fall of 2023. Over 100 funds have expressed interest in the initiative and since the official launch, 22 businesses have taken significant steps to submit a formal application and undergo the process rigorous underwriting and due diligence. .
In early July 2024, the SBA granted the first license of the SBICCT Initiative. Just three months later, as of October 22, 2024, a total of 13 funds under ‘Green Light’ approval will raise private capital and be licensed by the SBA. Funds include all 14 DoD Critical Technology Areas and component-level technologies, manufacturing processes. They represent all parts of the capital pool across the stages of investment, ranging from start-up to late-stage acquisition, and from venture debt to special situation loans.
Interest in the SBICCT Initiative continues to grow, with additional applications expected in future quarterly submission windows. The next submission deadline is November 15, 2024. For more information on the SBICCT Initiative and the application process, please see the Investment Policy Statement.
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About SBA’s Office of Investment and Innovation (OII)
The US Small Business Administration’s (SBA) Office of Investment and Innovation (OII) runs programs that provide the US growth-oriented small business and startup community with access to financial capital, networking , R&D assistance and funding to develop commercially viable innovations. Our work is supported by public-private partnerships that help small businesses on their trajectory from idea to IPO. To learn more, visit the OII on the SBA.gov website.
About the US Small Business Administration
The US Small Business Administration helps power the American dream of business ownership. As the single resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared a disaster. It provides services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.
CONTACT: Christine Saah Nazer U.S. Small Business Administration (202) 756-0304 Christine.saahnazer@sba.gov