§ 16-u. Innovate NY fund. 1. The Innovate NY fund is hereby created.
The purpose of the Innovate NY fund is to make available state funds to
eligible applicants to support emerging business ideas and products that
result in the growth of business within the state and the concomitant
creation of jobs and tax revenues for the state.

2. Eligible applicants for Innovate NY funds may include regional and
local economic development organizations, technology development
organizations, research universities, and investment funds that provide
seed-stage investments in New York state companies.

3. Funding from the Innovate NY fund may be made available to the
applicant for investment in beneficiary companies. In order to be
eligible for an investment that includes Innovate NY investment funds, a
beneficiary company must: (a) be, or agree in writing to be, located in
New York state; (b) be in the seed-stage of development, as defined by
the corporation; (c) demonstrate a potential for substantial growth and
job development in an emerging technology field, as defined in section
thirty-one hundred two-e of the public authorities law or in regulations
as adopted by the corporation; and (d) have the potential to generate
additional economic activity in New York state. Investment priority
shall be given to beneficiary companies involved in commercialization of
research and development or high technology manufacturing.

4. The corporation shall establish a competitive process for the
evaluation of applicants for the Innovate NY investment fund. Applicants
shall be evaluated on criteria including, but not limited to, the
applicant's: (a) track record of success in raising investment funds and
successfully investing them; (b) capacity to perform due diligence and
to provide management expertise and other value-added services to
beneficiary companies; (c) financial resources for identifying and
investing in seed-stage companies; (d) ability to secure non-state
matching program investment funds at a ratio that is equal to or greater
than one to one (1:1); (e) ability to evaluate the commercial potential
of emerging technologies; (f) ability to secure partnerships with local
or regional investors; (g) adoption of conflict of interest provisions
acceptable to the corporation; and (h) other criteria that the
corporation determines is relevant to making investment decisions
consistent with the purposes of the fund as set forth in subdivision one
of this section. When awarding funds pursuant to this subdivision, the
corporation shall assure that the applicants demonstrate the need for
seed capital in the areas served by the applicant and provide for
adequate geographic distribution of awards to beneficiary companies
throughout the state to the extent feasible. The corporation shall
distribute funds promptly pursuant to a disbursement process agreed to
between the corporation and applicant to enable the applicant to fulfill
commitments to beneficiary companies in a timely manner.

5. At the time the applicant has invested fifty percent of the
Innovate NY funds committed to such applicant and annually thereafter,
aggregate investments of Innovate NY funds by such applicant in
beneficiary companies shall be leveraged with private sources of capital
excluding investments after the initial funding round at a ratio equal
to or greater than two to one (2:1).

6. The Innovate NY fund shall not invest an amount in any single
beneficiary company that exceeds five hundred thousand dollars, or seven
hundred fifty thousand dollars in the case of any individual
biotechnology-related beneficiary, at any one time, subject to certain
exceptions to be established by rules and regulations of the
corporation.

7. Notwithstanding any provision of law to the contrary, the
corporation may establish a program fund for program use and pay into
such fund any eligible funds available to the corporation from any
source, including moneys appropriated by the state.

8. The corporation shall submit a report annually on December
thirty-first to the director of the budget, the temporary president of
the senate, the speaker of the assembly, the minority leader of the
senate and the minority leader of the assembly detailing (a) the total
amount of funds committed to each applicant that receives funds and the
amount of such funds that has been invested by each such applicant; (b)
the amount of Innovate NY and private funds invested in each beneficiary
company; (c) the type of product or technology being developed or
produced by each beneficiary company; (d) the location of each
beneficiary company; (e) the number of jobs projected to be created or
retained; and (f) such other information as the corporation deems
necessary.

9. The corporation is hereby authorized to promulgate rules and
regulations in accordance with the state administrative procedure act as
are necessary to fulfill the purposes of this section, including with
respect to reasonable management fees, promotes, share of return and
other fees and charges of applicants that receive funds, and to provide
for the repayment of funds received by the beneficiary company if the
beneficiary company leaves New York state within a period of time to be
established by the corporation.

10. In accordance with the rules and regulations to be promulgated by
the corporation, the corporation may impose fees, establish repayment
terms and provide for equity participation by the corporation in
connection with investments from the Innovate NY fund.

11. The provisions of section ten and subdivision two of section
sixteen of this act shall not apply to assistance provided under this
section.