Utah fund of funds

The Utah Fund of Funds was created by the Utah Legislature to increase the amount and diversity of capital funding available to high growth, early stage companies in the state in an effort to help them grow, prosper and grow up in Utah. Rather than invest directly in these companies, the program is structured to incent high quality professional venture capital firms both in and out of the state to focus more of their investment efforts on Utah entrepreneurs. The Utah Fund of Funds evaluates quality venture firms with the assistance of the program’s professional investment advisor. Venture funds that receive Utah Fund of Funds investment dollars commit to work closely with Utah companies and entrepreneurs – with the goal of funding promising deals in the state. The Utah Fund of Funds does not require portfolio funds to open a Utah office or commit to invest specific dollar amounts in Utah companies. Rather, the Fund of Funds requires a commitment by funds’ senior management to spend considerable time in Utah meeting with companies in the state.

The Utah Fund of Funds ultimately took shape in 2003, in the form of Utah House Bill 240 (“HB 240”), the Venture Capital Enhancement Act. An unfunded legislative workgroup crafted the legislation Led by Representative Peggy Wallace, the Utah Information Technology Association (UITA; now the Utah Technology Council, UTC), economic development leaders and entrepreneurs,. The legislation surprised many observers by passing overwhelmingly through both the Senate and the House in its first year.

Financing

The Utah Fund of Funds $300M financing was provided by a third party, and is backed by refundable, transferable, contingent State of Utah tax credits approved by the Utah Legislature. The program is structured to be financially self-sustaining, with profits from Utah Fund of Funds investments paying back financers. Only in the case of a shortfall would the state be required to place tax credit funds into the Utah Fund of Funds.

Structure

The Utah Fund of Funds is governed by two boards that oversee and report on the fund’s activities. The Utah Fund of Funds managing director directs the fund, with support from a professional investment advisor firm.