Wyoming SSBCI venture capital, an allocation that is entirely equity

Two strategies, both equity, and no lending program at all

Treasury's portfolio table for Wyoming has two lines and no others. Wyoming Venture Funds holds $23.4 million as a fund-level equity program and Wyoming Venture Direct holds $35.0 million as a direct equity program, for a total of $58.4 million. The Wyoming Business Council is the implementing entity and administers both.

The Business Council announced the program, which it calls Wyoming Venture Capital or WYVC, on March 15, 2023, and opened applications on April 2, 2023. It describes WYVC as the quasi-governmental equivalent of a venture capital fund with a geographic focus.

The Funds Strategy makes limited partner investments in Wyoming-focused seed or early-stage venture funds. The Direct Strategy makes equity co-investments in startups, aimed at seed and Series A rounds. Both target the same share of what they participate in.

The 20 percent target and the 50 percent ceiling apply to both

WYVC targets contributing 20 percent to a selected fund or company's fundraising round, with a maximum of 50 percent or $5 million, whichever is less. That structure holds on both sides of the program: up to $5 million per company across multiple rounds on the direct side, and up to $5 million per fund on the funds side, with the same 50 percent ceiling in each case. Requests above $2 million require additional due diligence and approval.

Two sequencing rules follow from that and they are the ones most likely to catch a company out. WYVC states that it will never act as the lead investor in any fundraising round, and that it will not invest more than 100 percent of the funds already received from other investors in the round. Treasury's summary states the same requirement from the other direction, that a company seeking capital must have a strategic lead investor secured, and adds that the private investment should be pari passu with or junior to Wyoming's investment in cash flow rights.

WYVC will draft a letter of intent to help secure other investors, including a lead, but states that it will not commit to making introductions or driving the round. It also declines to cover attorney fees, noting that round terms typically leave those with the company.

What counts as a Wyoming company, and what does not disqualify one

The Business Council's glossary defines a Wyoming-based company as one that is headquartered in Wyoming, has at least 60 percent of employees in Wyoming, has at least 60 percent of equity owners living in Wyoming, or is committed to meeting one of those three within one year of receiving investment. A company not currently based in the state is eligible if it commits to relocating within a year of funding.

Companies with 200 employees or fewer are eligible. Holding debt does not disqualify a company from applying, and the age of the company is not a consideration in the application process, which is a wider door than most programs in this directory open.

On the funds side the state test moves to the portfolio. A fund does not have to be based in Wyoming, though the Business Council states a preference for Wyoming or the same United States region, and it requires that an overwhelming majority, meaning at least 80 percent, of the fund's investments be made in Wyoming companies. Funds are industry-agnostic, and once WYVC has invested, individual investment decisions sit with the fund's own operating agreements rather than requiring further approval.

The rules a fund manager should read before applying

The Funds Strategy carries a small set of constraints that a manager needs to model rather than discover later.

• The management fee cannot average more than 1.71 percent on an annualised basis.
• Investments made with WYVC capital must be early-stage rounds totalling no more than $5 million.
• A fund may not use SSBCI dollars to purchase any portion of the ownership interest of an existing owner, which rules out secondary purchases.
• Qualified investments are in startup or high-growth companies expected to return capital in five to seven years on average.
• WYVC can invest alongside a partner fund with Direct Strategy money, provided WYVC capital from both sources totals 50 percent or less of the round.

Treasury adds a scale expectation the Business Council pages do not state: Wyoming expects to commit capital to up to eight venture funds during the first three years of the program, and the Funds Strategy invests as a limited partner in funds where its commitment causes and results in the fund reaching a first close.

What the program says it does after the cheque clears

The Business Council states that it stays involved after investing, listing board observation, sourcing alternate funding, connecting founders to other founders and to Wyoming services, connecting them to interns, and helping fill positions through its jobs board. It publishes its portfolio companies and an annual deal flow report, and names Breakthrough Venture Capital of Casper among its partner funds.

None of that is a term of the investment, and it is repeated here because it is how the program describes the relationship rather than because it changes the arithmetic.