I 

111TH CONGRESS 

2D SESSION H. R. 5411 

To direct the Secretary of Commerce to establish an early-stage business 

investment and incubation grant program, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 26, 2010 

Ms. KOSMAS introduced the following bill; which was referred to the Committee on Transportation and Infrastructure, and in addition to the Committee on Financial Services, for a period to be subsequently determined 

by the Speaker, in each case for consideration of such provisions as fall 

within the jurisdiction of the committee concerned 

A BILL 

To direct the Secretary of Commerce to establish an earlystage business investment and incubation grant program, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Early-Stage Business 

5 Investment and Incubation Act of 2010’’. 


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1 SEC. 2. EARLY-STAGE BUSINESS INVESTMENT AND INCUBA2 TION GRANT PROGRAM. 

3 (a) ESTABLISHMENT.—Not later than 60 days after 

4 the date of enactment of this Act, the Secretary of Com5 merce shall establish an early-stage business investment 

6 and incubation grant program (in this section referred to 

7 as the ‘‘program’’) to support the development of early8 stage businesses in targeted industries. 

9 (b) GRANT AUTHORITY.— 

10 (1) IN GENERAL.—In carrying out the program, 

11 the Secretary is authorized to make grants to cov12 ered business incubators. 

13 (2) GRANT AMOUNTS.— 

14 (A) NON-FEDERAL CAPITAL LIMITATION.— 

15 A grant made to a covered business incubator 

16 under the program may not be in an amount 

17 that exceeds the amount of the incubator’s cap18 ital that— 

19 (i) is not from a Federal source; and 

20 (ii) is available for investment and in21 cubation services on or before the date on 

22 which a grant is drawn upon. 

23 (B) AGGREGATE AMOUNT LIMITATION.— 

24 The aggregate amount of all grants made to a 

25 covered business incubator under the program 

26 may not exceed $5,000,000. 


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1 (c) GRANT AWARD PROCESS.—In making a grant 

2 under the program, the Secretary shall commit a grant 

3 amount to a covered business incubator and the amount 

4 of each such commitment shall remain available to be 

5 drawn upon by such incubator during the 5-year period 

6 beginning on the date on which each such commitment 

7 is first drawn upon. 

8 (d) USE OF GRANT.— 

9 (1) IN GENERAL.—A grant made under the 

10 program may be used by a covered business incu11 bator for the following: 

12 (A) Making an investment in an early13 stage business in a targeted industry. 

14 (B) Providing training, counseling, and 

15 other assistance to an early-stage business in a 

16 targeted industry to support the development of 

17 the business. 

18 (C) Providing purchased services to an 

19 early-stage business in a targeted industry. 

20 (D) Conducting due diligence activities. 

21 (E) Meeting operational expenses. 

22 (2) LIMITATIONS.— 

23 (A) PURCHASED SERVICES.—Not more 

24 than 20 percent of the amount of a grant made 

25 to a covered business incubator under the proVerDate Mar 15 2010 20:56 May 27, 2010 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5411.IH H5411

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1 gram may be used by the incubator to provide 

2 purchased services to an early-stage business in 

3 a targeted industry. 

4 (B) DUE DILIGENCE ACTIVITIES.—Not 

5 more than 6 percent of the amount of a grant 

6 made to a covered business incubator under the 

7 program may be used by the incubator to con8 duct due diligence activities. 

9 (C) OPERATIONAL EXPENSES.—Not more 

10 than 5 percent of the amount of a grant made 

11 to a covered business incubator under the pro12 gram may be used by the incubator to meet 

13 operational expenses. 

14 (3) DESIGNATION OF GRANT USES.—In the ap15 plication of a covered business incubator for a grant 

16 under the program, the incubator shall notify the 

17 Secretary of the percentage of the grant amount 

18 that will be used for each of the activities described 

19 in subparagraphs (A) through (E) of paragraph (1) 

20 and provide a detailed description of the activities to 

21 be undertaken. 

22 (e) GRANT CONDITIONS.— 

23 (1) FUND MANAGER.—As a condition of receiv24 ing a grant under the program, a covered business 

25 incubator shall designate an individual as the fund 


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1 manager for the grant amount, who shall administer 

2 and be responsible to the Secretary for information 

3 with respect to the grant amounts received. 

4 (2) INVESTMENT COMMITTEE.—As a condition 

5 of receiving a grant under the program, a covered 

6 business incubator shall establish an investment 

7 committee composed of not less than 5 individuals 

8 (3 of whom may not be employed by or related to 

9 the incubator or an affiliate of the incubator) that 

10 shall— 

11 (A) review proposals for and advise the in12 cubator on the use of grant funds; 

13 (B) provide letters of support and ref14 erence to the Secretary with respect to pro15 posals for the use of grant funds by the incu16 bator; and 

17 (C) submit periodic reports to the Sec18 retary on the results of activities carried out 

19 with grant funds. 

20 (3) COLLABORATOR.—As a condition of receiv21 ing a grant under the program, a covered business 

22 incubator shall assign to each early-stage business in 

23 a targeted industry that is assisted with grant 

24 amounts a collaborator who shall be an individual 

25 not employed by or related to the incubator or an afVerDate Mar 15 2010 20:56 May 27, 2010 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5411.IH H5411

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1 filiate of the incubator and who shall assist the incu2 bator in providing support to the business. 

3 (f) FEDERAL SHARE OF ACTIVITIES.—The Federal 

4 share of the cost of an activity carried out by a covered 

5 business incubator with the assistance of a grant under 

6 the program shall not exceed 75 percent of such cost. 

7 (g) MONITORING AND EVALUATION.— 

8 (1) IN GENERAL.—The Secretary shall assess 

9 the effectiveness of covered business incubators that 

10 receive a grant under the program. 

11 (2) DATA FROM INCUBATORS.—Not later than 

12 120 days after the date of receiving a grant under 

13 the program, a covered business incubator shall pro14 vide to the Secretary information on the activities of 

15 the incubator and on the businesses assisted under 

16 the grant, including— 

17 (A) the number of jobs created by the 

18 businesses; 

19 (B) the amount of taxes paid by the busi20 nesses and the employees of the businesses; and 

21 (C) other data that, as determined by the 

22 Secretary, may be used to measure the value of 

23 assistance under the program. 

24 (h) AUTHORIZATION OF APPROPRIATIONS.— 


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1 (1) IN GENERAL.—There is authorized to be 

2 appropriated to carry out the program— 

3 (A) $250,000,000 for the first full fiscal 

4 year beginning after the date of enactment of 

5 this Act; and 

6 (B) such sums as may be necessary for 

7 subsequent fiscal years. 

8 (2) PROHIBITION ON EARMARKS.—None of the 

9 funds appropriated for the program may be used for 

10 a congressional earmark as defined in clause 9(e) of 

11 rule XXI of the Rules of the House of Representa12 tives. 

13 (i) DEFINITIONS.—In this Act, the following defini14 tions apply: 

15 (1) COVERED BUSINESS INCUBATOR.—The 

16 term ‘‘covered business incubator’’ means a public or 

17 private not-for-profit organization, including an aca18 demic institution, that— 

19 (A) operates a program providing assist20 ance to early-stage business in targeted indus21 tries to support the development of those busi22 nesses; 

23 (B) has a physical location and on-site 

24 management for the program described under 

25 subparagraph (A); and 


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1 (C) has procedures for selecting businesses 

2 for and graduating businesses from the pro3 gram described under subparagraph (A). 

4 (2) DUE DILIGENCE ACTIVITIES.—The term 

5 ‘‘due diligence activities’’ means activities under6 taken to analyze and assess the desirability, value, 

7 and potential of an opportunity to provide assistance 

8 to an early-stage business in a targeted industry. 

9 (3) EARLY-STAGE BUSINESS IN A TARGETED

10 INDUSTRY.—The term ‘‘early-stage business in a 

11 targeted industry’’ means a small business concern 

12 that— 

13 (A) is domiciled in a State; 

14 (B) has not generated gross annual reve15 nues exceeding $15,000,000 in any of the pre16 vious 3 years; and 

17 (C) is engaged primarily in researching, 

18 developing, manufacturing, producing, or bring19 ing to market goods or services with respect to 

20 any of the following business sectors: 

21 (i) Agricultural technology. 

22 (ii) Energy technology. 

23 (iii) Environmental technology. 

24 (iv) Life science technology. 

25 (v) Biotechnology. 


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1 (vi) Information technology. 

2 (vii) Digital media. 

3 (viii) Clean technology. 

4 (ix) Defense technology. 

5 (x) Photonics technology. 

6 (xi) Electronic technology. 

7 (xii) Semiconductor technology. 

8 (xiii) Material science technology. 

9 (xiv) Aerospace. 

10 (xv) Communications. 

11 (xvi) Transportation. 

12 (4) OPERATIONAL EXPENSES.—The term 

13 ‘‘operational expenses’’ means the costs of operating 

14 an incubator, including overhead and management 

15 expenses. 

16 (5) PURCHASED SERVICES.—The term ‘‘pur17 chased services’’ means any training, counseling, or 

18 other assistance provided to an early-stage business 

19 in a targeted industry that is provided by a covered 

20 business incubator through an agreement with an21 other entity, and not by the incubator directly. 

22 (6) SECRETARY.—The terms ‘‘Secretary’’ and 

23 ‘‘Secretary of Commerce’’ mean the Secretary of 

24 Commerce acting through the Assistant Secretary of 

25 Commerce for Economic Development. 


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1 (7) SMALL BUSINESS CONCERN.—The term 

2 ‘‘small business concern’’ has the meaning given 

3 that term in section 3 of the Small Business Act (15 

4 U.S.C. 632). 

Æ 


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