The Small Business Administration (SBA) has announced that it has granted a venture capital fund from North Carolina the first license to participate in its new Early Stage Innovation Fund initiative. The new program makes government-guaranteed loans to venture capital funds, which in turn use the debt to make equity investments. It is based on the SBA’s Small Business Investment Company program, which guarantees loans to venture funds or investment companies that in turn make loans to small businesses.

The Innovation Fund, which is part of the Obama administration’s Startup America effort, makes $200 million in debt financing available in each of the next five years for early-stage venture funding. The goal of the program is to direct investment to the sorts of companies that generally are overlooked by venture capitalists. In evaluating funds that apply for licenses, the SBA has said it will look favorably on funds that propose to invest in younger companies in a broader array of industries located around the country.

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