15E.65 - IOWA FUND OF FUNDS.
15E.65 IOWA FUND OF FUNDS.
1. The Iowa capital investment corporation shall organize the
Iowa fund of funds. The Iowa fund of funds shall be authorized to
make investments in private seed and venture capital partnerships or
entities in a manner which will encourage the availability of a wide
variety of venture capital in the state, strengthen the economy of
the state, help business in Iowa gain access to sources of capital,
help build a significant, permanent source of capital available to
serve the needs of Iowa businesses, and accomplish all these benefits
in a way that minimizes the use of tax credits.
2. The Iowa capital investment corporation shall organize the
Iowa fund of funds in the following manner:
a. The Iowa fund of funds shall be organized as a private,
for-profit, limited partnership or limited liability company under
Iowa law pursuant to which the Iowa capital investment corporation
shall be the general partner or manager. The entity shall be
organized so as to provide for equity interests for designated
investors which provide for a designated scheduled rate of return.
The interest of the Iowa capital investment corporation in the Iowa
fund of funds shall be to serve as general partner or manager and to
be paid a management fee for the service as provided in section
15E.64, subsection 8, and to receive investment returns of the Iowa
fund of funds in excess of those payable to designated investors.
Any returns in excess of those payable to designated investors shall
be reinvested by the Iowa capital investment corporation by being
held in the Iowa fund of funds as a revolving fund for reinvestment
in venture capital funds or investments until the termination of the
Iowa fund of funds. Any returns received from these reinvestments
shall be deposited in the revolving fund.
b. The Iowa fund of funds shall principally make investments
in high-quality venture capital funds managed by investment managers
who have made a commitment to consider equity investments in
businesses located within the state of Iowa and which have committed
to maintain a physical presence within the state of Iowa. The
investments by the Iowa fund of funds shall be focused principally on
partnership interests in private venture capital funds and not in
direct investments in individual businesses. The Iowa fund of funds
shall invest in venture capital funds with experienced managers or
management teams with demonstrated expertise and a successful history
in the investment of venture capital funds. The Iowa fund of funds
may invest in newly created venture capital funds as long as the
managers or management teams of the funds have the experience,
expertise, and a successful history in the investment of venture
capital funds described in this paragraph.
c. The Iowa fund of funds shall establish and administer a
program to provide loan guarantees and other related credit
enhancements on loans to rural and small business borrowers within
the state of Iowa. The Iowa fund of funds shall invest five percent
of its assets in investments for this program.
d. The Iowa fund of funds shall have the power to engage
consultants, expend funds, invest funds, contract, bond or insure
against loss, or perform any other act necessary to carry out its
purpose, including, without limitation, engaging and agreeing to
compensate a venture capital investment fund allocation manager.
Such compensation shall be in addition to the management fee paid to
the Iowa capital investment corporation. However, the Iowa fund of
funds shall not hire employees except to administer its rural and
small business loan guarantee and credit enhancement program.
e. The Iowa fund of funds may issue debt and borrow such
funds as may be needed to accomplish its goals. However, such debt
shall not be secured by tax credits issued by the board. The Iowa
fund of funds may open and manage bank and short-term investment
accounts as deemed necessary by the venture capital investment fund
allocation manager.
f. The Iowa fund of funds may expend moneys to secure
investment ratings for investments by designated investors in the
Iowa fund of funds.
g. Each calendar year, the auditor of state shall conduct an
annual audit of the activities of the Iowa fund of funds or shall
engage an independent auditor to conduct the audit, provided that the
independent auditor has no business, contractual, or other connection
to the Iowa capital investment corporation or the Iowa fund of funds.
The corporation shall reimburse the auditor of state for costs
associated with the annual audit. The audit shall be delivered to
the Iowa capital investment corporation and the board each year and
shall include a valuation of the assets owned by the Iowa fund of
funds as of the end of each year.
h. Fifty years after the organization of the Iowa fund of
funds, the Iowa capital investment corporation shall cause the Iowa
fund of funds to be liquidated with all of its assets distributed to
its owners in accordance with the provisions of its organizational
documents.
i. Upon the liquidation of the Iowa fund of funds, the Iowa
capital investment corporation shall file a report with the general
assembly stating how many jobs in this state were created through
investments made by the Iowa fund of funds. Section History: Recent Form
2002 Acts, ch 1005, §5; 2002 Acts, ch 1006, §13, 14; 2005 Acts, ch
7, §2, 4
Referred to in § 15E.45, 15E.51, 15E.62