The DC Innovation Finance Program (IFP) provides capital for investment in DC start-ups and emerging businesses seeking alternatives to traditional commercial financing. Capital is provided through co-investment with an eligible investment firm.
Purpose: Provides growth capital to DC-based start-ups and early-stage businesses that may face challenges accessing traditional financing.
Return on Investment (ROI): The District of Columbia receives a proportional share of any return on investment (ROI). In some instances, private investors are eligible to receive 25%-40% of the Districts' share of ROI instead of collecting investment fees. If an investment results in a loss, the District and the investor share the loss equally.
Enhanced Investment: Eligible businesses may receive up to 15% of the District’s share of any return on investment (ROI) when certain economic development goals are met such as hiring targeted residents, locating in designated areas, or qualifying as a Certified Business Enterprise (CBE) or minority/woman-owned business.
Investee Company Eligibility Requirements
- Non-public company registered in the District and subject to taxation in the District (e.g. a corporation, partnership, joint venture, cooperative, sole proprietorship, District-designated charitable and other non-profit institution)
- Fewer than 750 existing employees, including subsidiaries and affiliates
- Principal offices within District (demonstrated by lease or deed)
- At least 75% of employees, including subsidiaries and affiliates, must work in and provide services in the District
- At least 25% of W-2 employees are District residents
- Maximum of 50% of investment up to $500,000
- Principals must not have been convicted of a sex offense against a minor
- Principals must not have any conflict of interest with the lender, investor or the government
- For an Enhanced Investment transaction, meet economic development goals
Investor Eligibility Requirements
1. Demonstrate a track record of positive return on investment and meet one of the following:
- Be a certified as a Community Development Financial Institution;
- Be registered as a Business Development Company;
- Be certified as a Small Business Investment Company, New Market Venture Capital Company, or Rural Business Investment Company; or
- Have at least $5,000,000 of assets under management or be an A credited Investor, both of which must have qualified management and staff.
2. If the Innovation Finance Company is an Angel Investor Network, it shall meet the following requirements:
- Each member of the group is an Accredited Investor;
- The group has been operating as a group for a minimum of 5 years and has made cumulative yearly investments of at least $500,000 per year and average investment of no less than $125,000 per investee company;
- Each member of the group shall not have been convicted of a sex offense against a minor; and
- Each member of the group shall not have any conflict of interest with the business or the government.
Loan Fund Authorized and Non-Authorized Purposes
Funds may be used for the following authorized purposes:
- Start-up costs
- Working capital
- Business procurement
- Franchise fees
- Equipment
- Inventory
- Purchase, construction, renovation or tenant improvement of commercial real estate
- Tangible and intangible property (except goodwill)
Funds may NOT be used for the following purposes:
- Speculative activities deriving profits from fluctuations in prices
- Lending activities (business with more than 50% revenue from lending activity)
- Pyramid sales
- Illegal activities
- Gambling (some lottery exception)
- Passive investments, including real estate held for sale lease or investment
- Evangelizing, Proselyting or Lobbying
- Repayment of Delinquent income taxes
- Repayment of taxes held in trust or escrow
- Reimbursement of funds owned to an owner
- Purchase of ownership interest of an owner
- Double dipping with other Federal programs
- Refinancing with the same investor
- Outside of the District