FAQ

• SSBCI is an acronym for the State Small Business Credit Initiative, a capital funding program reauthorized by President Biden under the American Rescue Plan Act and administered by the US Department of Treasury. The State of South Carolina was awarded $101M in federal funding with the goal of promoting small business stability, growth, and success. The program will provide increased access to capital to small businesses and entrepreneurs in South Carolina with half of the awarded funds allocated for venture capital through a South Carolina nonprofit, InvestSC, Inc.

• Funds are managed and deployed under the Co-Investing Venture Capital Equity program composed of the following two models:
  • Direct Investing Model
  • Fund Investing Model

• InvestSC, Inc.

• InvestSC, Inc. is a 503(c) nonprofit entity created by JEDA (the South Carolina Jobs-Economic Development Authority) to deploy the venture capital programs, established using the federal SSBCI funds, .

• The direct investing model utilizes Investment Managers to make separate equity investments directly into companies alongside dollar-for-dollar private matching capital, all at the deal level. Consequently, founders bear the responsibility of securing all matching capital.

• InvestSC will be contracting with entities from South Carolina to act as Investment managers to accelerate deployment of SSBCI capital to founders in the South Carolina ecosystem. They will be announced in June 2024.

• The fund investing model uses an investment company that holds a portfolio of investment funds, one of which is for SSBCI capital.  The fund makes equity investments directly into companies whereby matching funds have already been secured through other Limited Partners (LP’s) at the fund level. Consequently, founders do not bear the responsibility of securing matching capital.

• Venture capital funds are part of the fund investing model and are normally created using a limited liability company composed of a general partner overseeing the investments and several investors, referred to as Limited Partners (LPs), who invest in the Fund. InvestSC participates as an LP, expediting the deployment of SSBCI capital to entrepreneurs in the South Carolina ecosystem. Currently, Hi Mark Capital is the sole venture capital fund, with ongoing discussions to onboard more fund managers.

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• Click here! 

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• You can visit the Hi Mark Capital website here. 
• Investment Managers will be announced on the new InvestSC website - launching June 2024.

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• Yes

• Yes - the only difference is direct investment models require the founder to find matching capital and the fund investment models do not.

• Eligible: Companies with scalable business models that are located in South Carolina and are well suited for venture funding. In short, we are looking to invest in great companies with business models built to generate strong capital returns for our fund.

• Ineligible: Companies that partake in speculative activities (oil, stock trading, etc.), companies that earn more than half its revenue from lending activities, pyramid sales, activities prohibited by federal law (such as cannabis/marijuana), and gaming/gambling activities

• You need to be a domiciled company operating in South Carolina registered to do business with the SC Secretary of State and have less than 750 employees.

• All approved investments will enter legal diligence, including required SSBCI program certification. Sample certifications are available here, including Use of Proceeds and Conflict of Interest, Sex Offender, SEDI-Owned Businesses (as applicable)

• Click here to fill out an application with InvestSC. Please make sure you meet guidelines before applying! (Website is coming!)

• If you wish to apply with an Investment Manager or venture capital fund please visit their websites.

• The company should be a C-Corporation. We will NOT invest in limited liability companies (LLCs) or S-Corporations.

• It is equity only. Both direct and fund investing contracted partners acquire equity in your company, same as any private investor.

• Yes. InvestSC uses standard investment vehicles - Convertible Notes and Priced Equity (No SAFEs).

• Investment Managers and venture capital funds have their own separate investment vehicles.

• For every $1 dollar in private funding raised, InvestSC/Investment Manager will match (up to) that with another $1 upon approval.
  • Example: A founder has obtained $100,000 in private funding, InvestSC/Investment Manager will match an additional $100,000 investment under the same terms upon approval.

• No - private capital can come from any entity or investor located within the US.

• Yes.

• Yes- InvestSC can be a lead investor as this is critical to be a cause for securing additional matching capital.

• Yes - Contracted Investment Managers and Venture Funds can be a lead investor as well, again critical to be a cause for securing additional marching capital.

• This passage outlines conditions under which a private investment made before SSBCI funding can be considered towards the matching capital ratio, provided that the SSBCI funds were the catalyst for the private investment. Let's break down and illustrate this with a few numerical examples

• Two Numerical Examples:

• Example A: (capital raised in the same round)
  • There is a signed term sheet specifying the inclusion of SSBCI funding in April 2024 with InvestSC as the lead investor. Subsequently, a private financing transaction occurred in May 2024 for $300K.
  • InvestSC/Investment Manager makes an SSBCI investment in July 2024 and can count the $300K of private financing from May 2024 as matching funds for this round.

• Example B: (cause and result)
  • A private investment of $450K occurs prior to an SSBCI investment in April 2024.
  • The founder submits board meeting minutes as documentation, demonstrating direct influence of SSBCI funding on the $450K private capital investment in April 2024.
  • InvestSC/Investment Manager can now count the $450K private financing as matching funds.

• Investment capital from Angels, Venture Capital Funds, Private Equity, Family Office, and High Net Worth Individuals all qualify.

• Loans, Grants and any other SSBCI capital do not qualify.

• Grants and/or equity investments from SCRA (South Carolina Research Authority) do not qualify.

• InvestSC and Investment managers match at the deal level and can participate in follow-on funding opportunities.

• Venture Funds match at the fund level and can participate in follow-on funding opportunities as well.

• No more than $10M can be invested in a single company.

• Participation in a single fundraising round must not exceed $5 million.

• Depends on each company, the stage, deal terms, the total amount being raised, and the amount of matching capital raised.

• Diligence is a 4-to-6-week process. InvestSC must complete legal, operational, and financial diligence.

• Operation diligence will cover the 5 P’s - the People, Problem, Progress to date, Price, and Product.

• Investment Managers and Venture Funds have their own diligence processes.

• Once diligence reports are completed and all supporting documentation received, the company’s full application must be reviewed by the InvestSC Board of Directors for final approval.

• Investment Managers and venture capital funds have their own approval process and committee.

• A week after the board approves the application, and if there are no issues with paperwork or matching capital.

• Investment and fund managers have their own timeline.

• Monthly or as needed to accommodate 90-day timelines.

• Contracted Investment and fund managers have their own timeline.

• No - the total round size cannot be greater than $5M and applies to both the Direct and Fund investing models.

• Direct and Venture Fund models do not invest in lifestyle companies, companies engaging in lending activities, speculative activities, activities prohibited by law, or gambling/gaming activities.

• Investment proceeds will be used for a business purpose that does not include passive real estate investment purposes, repayment of delinquent taxes, reimbursement of funds to any owner or to buyout a founder/co-founder.

• Diligence will take 4-6 weeks. Please plan to contact the investment team with an adequate amount of time to coordinate this report. This applies to both Direct and Venture Fund models.

• Treasury and InvestSC aim to prioritize investments that benefit Socially and Economically Disadvantaged Individuals (SEDI). While the SSBCI program targets this group as a goal, it is not mandatory for a company seeking funding to meet this criterion. Companies are eligible to apply for matched funds irrespective of their alignment with SEDI goals.

• If this is indicated in a company’s application, it allows us and the Treasury to measure the success of the SSBCI program. It will not impact your application.

• We are not allowed, per SSBCI guidelines, to utilize another group’s diligence report, although it can be referenced. The final diligence report used must be our own independent findings of the company’s structure and organization.

• This applies to both the Direct and Venture Fund investing models.

• InvestSC conducts independent due diligence procedures regardless of any other due diligence processes conducted. However, as part of its research, InvestSC engages with and collaborates with other participating investors, which in many instances can accelerate the entire process.

• Investment Managers and venture capital funds have their own process and policy regarding due diligence.

• We are unable to provide updates on the status of your application while our review process is ongoing, as this will slow our capacity to process applications and make investments. If we are interested in moving forward with your application, we will be in touch. If we do not think there is a fit with our program, we will let you know via email.

• All investees are required to make available to the Treasury Inspector General and the Government Accountability Office all books and records related to the use of the SSBCI funds, subject to applicable privacy laws, including but not limited to 12 U.S.C. § 3401 et seq., including detailed loan and investment records, as applicable.

• InvestSC and investment managers will require quarterly business and financial updates from all investees

• We are accepting applications on a rolling basis and reviewing new applications regularly. There is no fixed deadline to apply at this time.

• Yes, though a company does not need to raise matching capital nor secure a lead investor prior to applying for InvestSC investment. The 1:1 private capital match requirement is considered on a per transaction basis, and private investment must be made on the same terms as the InvestSC. Debt and grant financing, including personal capital provided by the founder(s), do not meet the requirements of the private match. Capital invested prior to InvestSC’s investment will not qualify for the 1:1 private capital matching requirement unless it meets the 90-day threshold outlined on page 28 of the SSBCI Capital Program Policy Guidelines. After receiving an investment offer/term sheet from InvestSC, the company will have an agreed upon timeline to raise matching capital to satisfy the 1:1 private capital match requirement.