A bill that critics say would put North Carolina into the venture capital business is alive and well after three Republicans and one Democrat raised it in the Senate Finance Committee this afternoon.
The debate marked a third attempt in as many years to pass the measure, known as the Life Sciences Development Act (Senate Bill 527). It would establish a private limited liability company to make taxpayer-funded loans of up to $30 million each to biotech startup companies. To underwrite the loans, the Life Sciences Development Company would sell equity certificates (similar to shares of ownership) to investors.
The bill also would cover investors’ outlays by giving them taxpayer-funded credits if returns from the startup companies weren’t as much as expected. Foes of the proposal say the credits would have taxpayers assume at least part of the venture capitalists’ risk.
“The fact that they can’t get these loans in the private marketplace tells me that they’re very risky,” said Sen. Jerry Tillman, R-Randolph. “We’re taking on risk that nobody else wants to touch, but we’re willing to back it.”
Sen. Tom Apodaca, R-Henderson, a primary sponsor of S.B. 527, praised the measure during the committee hearing. “Start-up companies are not going to be able to walk into a bank and receive financing,” he said. “This is risky, yes, but the payback far exceeds the risk with what this can do.”
The legislation passed the Finance Committee by voice vote. Its next stop is the Senate floor, where it must pass before the crossover deadline Thursday in order to be eligible for consideration in the legislature’s short session next year.
To read Carolina Journal’s past coverage on this issue, click here, here, here, and here.
David N. Bass is an associate editor of Carolina Journal.