IBank Announces Additional Funding to Support Its Expanding Venture Capital Access Program

 [ Article originally appeared in https://business.ca.gov ]

State adds up to $50 million to increase new VC program’s reach and effectiveness

The state of California’s Infrastructure and Economic Development Bank (IBank) announced a new state supplement fund designed to increase effectiveness of its Expanding Venture Capital Access program.

Launched in 2022, the program was designed to create a more inclusive VC ecosystem by supporting underrepresented fund managers and entrepreneurs. The program is funded by $200 million of California’s $1.2 billion allocation from the U.S. Treasury’s State Small Business Credit Initiative (SSBCI). SSBCI provides capital to fund small businesses, including those that are run by socially and economically disadvantaged individuals. This new supplement will add up to $50 million from the state’s Small Business Expansion Fund to commit $250 million for the program.

“With any new program, the early days are often the most important. Now that we have been in the market and started deploying funds, we’ve been able to gather real-world feedback from emerging investors and entrepreneurs the program was designed to support,” said Derrick Tang, IBank Deputy Director of Venture Capital.

“By creating this state supplement fund, we are directly addressing market feedback to improve our VC program and better meet our mission,” said Scott Wu, IBank Executive Director. “We understand that restrictions built into the federal SSBCI funding can create challenges for some emerging investors, especially those starting their first funds. The state supplement allows fund managers to overcome those challenges and contribute more effectively to an inclusive VC industry.”

The state supplement will enable the VC program to make investments in venture funds under the same economic terms as other market investors, which reduces burden on the fund manager and encourages catalytic private investment.

About the Expanding Venture Capital Access Program: While California is home to many of the world’s top venture capital firms, the VC community is demographically concentrated, making it challenging for underserved investors and startups to access funding. Studies have shown that startups led by inclusive teams have generated better investment returns than teams that lack diversity.

The Expanding Venture Capital Access program’s primary focus is investing in underrepresented VC fund managers, including those in geographic areas that are socio-economically disadvantaged or that receive very limited VC funding. The program is also looking to make investments that promote climate equity and climate justice.

Administered by IBank, part of the Governor’s Office of Business and Economic Development (GO-Biz), in partnership with Cambridge Associates, the Expanding Venture Capital Access program made its first investment in June — $4.1 million in Unshackled Ventures, an immigrant-entrepreneur founded VC fund.

Interested VC fund managers can visit IBank’s Expanding Venture Capital Access webpage to learn more.

SOURCE: https://business.ca.gov/ibank-announces-additional-funding-to-support-its-expanding-venture-capital-access-program/