Strategic Growth Loan (SGL)
Program Description
The SGL Program is designed to help bridge the early-stage funding gap that many North Carolina biotechnology companies face. Through the SGL program, loans of up to $250,000 with favorable, market-competitive terms are available for biotechnology companies with a significant operating presence in North Carolina. Importantly, SGL funds must be matched by an equal investment or loan from one or more organized angel funds or networks (“Angel Groups”) or venture capital funds (“VCs”). This program is intended to fund companies to reach specific and meaningful milestones that will enable them to obtain further funding from private investors.
Eligibility
In order for a candidate biotechnology company to be eligible for the SGL, it must:
- Have significant operating presence in North Carolina. To establish a significant presence, the company must (i) maintain its head office (where its books and records are kept, taxes are paid, and senior management is located) in North Carolina as reported to the Secretary of State and/or (ii) conduct significant research, product development, or manufacturing activity in North Carolina.
- Be engaged in applied research, development or manufacturing utilizing living cells and/or biological molecules to develop a product or technology with commercial potential
- Have achieved a robust technical and commercially promising proof-of-principle of its technology for the intended product or application
- Have a committed, dedicated management team and a solid business plan
- Have valid license(s) to the relevant core intellectual property expected to be necessary for the company to commercialize its product or technology
- Obtain a commitment from an Angel Group or VC for an equity investment or loan at least equal in value to the amount being sought under the SGL
The Biotechnology Center determines compliance with these requirements in its sole discretion on a case-by-case basis.
Permitted Use of Funds
The SGL funds strategic growth activities intended to help the applicant achieve a significant company milestone (“Fundable Event”) that would position the company for follow-on investment. SGL funds can be used for both technical/product development and business development activities.
Application Procedures
Companies interested in applying for an SGL should contact the Biotechnology Center’s SGL program manager listed in the Contact section below to discuss the company, its proposed project, and the application procedures. After this discussion, company representatives may be invited to the Biotechnology Center to make an initial presentation.
Pre-Application: Once the applicant’s eligibility and general fit for the program have been established, the company may be invited to submit a 2-4 page pre-application describing the company’s management, technology, proposed project, and source of matching funds.
Full Application: Upon satisfactory review of the pre-application, the company may be invited to submit a full online application. This application will include the company’s complete business plan, project proposal, budget, financial statements, matching investment commitment(s), and other supporting documentation.
Review and Approval: The Business and Technology Development team will thoroughly review the company’s application and solicit independent, third-party reviewers to evaluate the technical and commercial merits of the proposal. Applicants will have the opportunity respond to external reviewers’ comments. Competitive applications will be presented to the NCBC’s Equity Investment Committee (EIC) for final review and approval.
Application Deadlines:
|
Pre-Application must be submitted no later than: |
And full application must be submitted by: |
For potential review by EIC in: |
|---|---|---|
| July 8, 2011 | August 10, 2011 | November 2011 |
| October 17, 2011 | November 17, 2011 | February 2012 |
| January 13, 2012 | February 15, 2012 | May 2012 |
| May 7, 2012 | June 7, 2012 | September 2012 |
| July 6, 2012 | August 8, 2012 | November 2012 |
Loan Terms
The SGL is an unsecured loan with favorable terms including:
- Three-year loan with 5% annual principal payments and balloon payment at maturity for remaining principal and accrued interest
- Interest rate equal to the current prime rate plus 1%
- Warrant coverage for a portion of the loan principal amount
Loan Distribution
Successful applicants will receive their loan funds according to the following schedule:
- 50% of the loan amount at closing
- An additional 40% upon receipt and approval of a mid-term project report
- The final 10% upon receipt and approval of a final project report
Mid-term and final reports include a detailed update of progress against proposed milestones (including supporting data) and actual spending versus budget. The Biotechnology Center will actively monitor the company’s progress until the SGL is repaid in full. Periodic progress reports and occasional site visits will be required.
| FY 2010 SGL Awards | FY 2011 SGL Awards |
|---|---|
|
Arbovax, Inc. ($250,000) |
Neuronex, Inc. ($250,000) |
Contact
Contact Joseph Nixon at joseph_nixon@ncbiotech.org with questions regarding this program or to schedule a preliminary meeting.
