CAPCO Programs

Dennis Murphree of Murphree Venture Partners in Texas participated in the state’s CAPCO Program in 2002:

Venture capitalist Dennis Murphree has joined a small band of fund managers in the country who participate in a little-known but rapidly expanding program called CAPCO.

A handful of states have passed legislation to create programs called CAPCO, an acronym for certified capital companies. These programs spawn investment funds, some as large as $175 million, that are designed to spur economic development.

The program itself is complicated, but it wasn’t difficult for Murphree and his partners to decide they wanted to be involved.

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The Park and Love, owned by Marc Barnes, received financing from Enhanced Capital Partners back in July, 2009:

Enhanced Capital, a national private investment firm participating in the District’s CAPCO program, has provided $300,000 in financing to two of the District’s premier establishments. The Park, a trendy four story restaurant and lounge, and Love, a sophisticated nightclub which opened in 2001, are both owned by DC visionary and entrepreneur Marc Barnes.

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Back in 2002, Representative Reilly introduced the Rhode Island Certified Capital Company Act:

Rhode Island, said Rep. Donald O. Reilly Jr. (D-Dist. 67) of Cumberland, currently ranks 36th in the nation in the amount of venture capital it receives for small businesses.

“Increased venture capital investments made in small businesses located in Rhode Island will lead to job creation and increased tax revenue for the state. That’s not wishful thinking. It is happening in other states all around the country and it’s time it happens in Rhode Island,” said Representative Reilly.

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Small businesses can turn to their local CAPCO programs for funding:

Fostering new businesses in your county (with their new tax revenue potential) is obviously a much better way to deal with state budget cutbacks and dwindling local revenues than increasing taxes or cutting services or both. And it doesn’t necessarily take a new automobile assembly plant in your community to turn the revenue slide.

For most counties, small businesses are the economic engines for their communities. The National Association of Small Business Owners reports that small businesses employ 51 percent of private sector workers; provide two-thirds to three-quarters of the new jobs; and represent 96 percent of all exporters of goods.

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Birmingham Business Journal announces the start of Alabama’s CAPCO program and Enhanced Capital Partners’ interest in opening an office in Birmingham:

A new state program that seeks to generate more dollars for startup businesses by giving tax credits to insurance companies that invest in venture capital firms has begun.

Alabama’s CapCo (certified capital companies) program, approved during the recent legislative session and signed into law April 18, was to have started July 1. But the state agency charged with writing the rules that govern the program delayed implementation to give more time for public input.

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The Birmingham Business Journal reports that over the span of ten years, $100 million will be invested through the Alabama CAPCO program:

A long-delayed state program that will provide a much-needed shot of venture capital for Alabama startups is finally under way. The program, signed into law nearly two years ago, provides $100 million in premium tax credits over the next decade to dozens of insurance companies that invest in certified capital companies, or CapCos. The six authorized CapCos, each run by one in-state and one out-of state venture firm, will reinvest the funds in qualified Alabama businesses seeking money to grow.

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