Improving Venture Capital in Texas Leads to Booming New Jobs

The Texas CAPCO or Certified Capital Company Program had been expanding since its inception in 2005 until 2010. Seed money for new startups that would bring Texas out of the recession that was lingering in 2001, was badly needed. Only venture capitalists and angel money groups were around at this time and that just was not enough to pull Texas out of its economic funk. Post dot-com bust, these resources became risk-averse and scarcer. New funding options were badly needed. The Texas legislature answered by implementing the CAPCO programs in 2005 as an alternative funds resource for seed monies that would grow its economy and create jobs. Being a private government sponsored entity providing venture capital for entrepreneurs, growth capital was then available for small business growth in Texas.

Texas Certified Capital Companies also known as CAPCO was spearheading programs that provided venture capital to start ups to create more jobs and revenue streams for the great state of Texas. Texas entrepreneurs were pleased to find that the Texas CAPCO programs offered Premium tax credits that were defined. These tax credits were also authorized. For insurance companies, a claim may be made and an investment at a maximum of 15 percent for the allocated tax credit total.

On capitalization, a single CAPCO program is required to begin at $500,000.00 capitalization and have two principle employees with capital management experience in the angle or venture capital industry.

CAPCO participants have certification requirements to meet as well which are as follows:

  • A Texas headquartered office is required as the location for the ‘qualified businesses,’ where investments are to be placed.
  • The timeline required at year number three, 30 percent of certified funds be placed in qualified businesses and then 50 percent at year five.
  • Only a maximum of 15% of certified capital can be sunk into any one portfolio.
  • All compliance points must be met with transparency in reporting

Currently there are no applications being processed or taken by the Texas CAPCO program. The program, when funded, was invested in $87,532,258 seed monies from CAPCO with amount of follow-on capital at $108,267,035. The number of jobs that were created and retained were at 1,731 as of 2008. These types of funds support early stage businesses. When small businesses follow the program criteria they have been successful in expanding job creation and the infrastructure of further venture capital entities in the state.