The National Association of Small Business Investment Companies (NASBIC) is the professional association for the Small Business Investment Company (SBIC) industry and the oldest continuously operating organization of venture capitalists in the world. Formed just months after the passage of the Small Business Investment Act of 1958, NASBIC has played a pivotal role in promoting the growth and vitality of the industry for more than 40 years.
The Western Regional Association of Small Business Investment Companies (WERASBIC) is one of four regional associations affiliated with the National Association of Small Business Investment Companies, headquartered in Washington, DC. Each year, members of the WERASBIC gather for a meeting and networking dinner in California.
For a discussion of the SBIC progran and its impact in the venture capital industry, please click HERE.
The Small Business Investment Company (SBIC) program was created to help small U.S. businesses meet their requirements for long-term growth capital not available through banks or other private capital sources. Small companies often require financing in the critical $250,000 to $5 million range in either the form of loans of the type not generally made by banks or equity investments not generally available from non-SBIC venture capital firms. SBICs fill this gap. Further, SBICs invest only in U.S. small businesses, companies that create almost all the net new jobs in our country.
The SBIC program is a private-sector-led partnership with the federal government. Experienced private-sector professionals manage SBICs. Capital required to start an SBIC—a minimum of from $5 million to $10 million—must come from private investors. Additional capital—as much as three times the private capital—is then potentially available to each SBIC through the U.S. Small Business Administration (SBA) by sale of SBA-guaranteed securities, but only upon approval by SBA following rigorous evaluation. The private capital is at risk in its entirety before any taxpayer money is at risk. SBA examines SBICs regularly to ensure their financial soundness and regulatory compliance.
Since its beginning in 1958, the SBIC program has provided $40 billion of long-term debt and equity capital to 95,000 small U.S. companies, with $2.47 billion invested in 2,610 small businesses in FY 2003 alone. The number of small businesses receiving SBIC financing in FY 2003 was up 21% from the 1,979 that received SBIC financing in FY 2002.z Small businesses receiving SBIC financing in FY 2003 employed approximately 347,000 individuals—an average of 133 employees per company—at the time they received the SBIC financing. The median number of employees in SBIC-financed companies was 30. Companies less than three years old received 43% of all investments. All SBIC investments are used by small businesses to support continued growth.
In states not generally served by private venture capital firms, SBICs play an important role in financing local businesses. Of the 2,610 U.S. small businesses that received FY 2003 SBIC financing, 1,112 (43%) were located in Low- and Moderate Income (LMI) areas of the company as designated by the government. Those companies received $556 million (23%) of the total $2.47 billion invested by SBICs in FY 2003.z SBICs are playing a vital role in our current national economic recovery. SBA reports that SBICs accounted for 59% of all venture capital investments, by number of investments for the period January through September 2003—up from 38% in 1997.
As of the end of FY 2003, there were 447 SBICs of all types operating in 45 states, the District of Columbia, and Puerto Rico. There are 58 SBICs located in California with just over $2 billion under management. SBICs held $21.6 billion in capital resources—up 7.5% from $20.1 billion at year-end FY 2002—a significant increase given the contraction in all other sources of venture capital. Of the total, $12.4 billion was private capital and $9.2 billion was SBA-guaranteed capital or commitments. In FY 2003, SBA licensed 36 new SBICs with $743 million in initial private capital.
Many well-known U.S. companies received early financing from SBICs, including America Online, Apple Computer, Callaway Golf, Intel, Staples, Quiznos, Federal Express, Outback Steakhouse, Costco, and Vermont Teddy Bear. Eight of the top 100 fastest-growing companies in America in 2003 received SBIC financing (Fortune, September 1, 2003), as did six of the top 100 “Hot Growth Companies for 2003” featured in BusinessWeek (June 9, 2003) and ten of the 100 “Top Information Technology Companies” in the U.S. (BusinessWeek, June 23, 2003).
Following are few of the hundreds of California-based companies that have received financing from Small Business Investment Companies since the beginning of FY 1999. Total SBIC investments in California small businesses during that period totaled $4,760,509,982.
Boxer Cross Inc., Menlo Park, develops, manufactures and supports innovative, fully automated metrology systems.
BriteSmile, Inc., Walnut Creek, offers consumers whiter teeth, in a safe one-hour procedure. The company’s innovative light-activated teeth whitening treatment is available exclusively at BriteSmile Professional Teeth Whitening Spas and at the offices of BriteSmile Associated Dentists throughout the U.S., South America, Asia, and Europe.
The Color Factory, Inc., Los Angeles, is one of the country’s leading cosmetics manufacturing companies with over 4,000 formulations for color cosmetics and skin care products along with the most advanced technology.
Gel-Pak LLC, Hayward, produces a family of innovative packaging products designed for applications where process uniformity is essential and maximum protection is required during shipping and handling of sensitive devices.
Impli Inc., Walnut Creek, has created a new digital medium that delivers entertainment, information, and advertising to consumers waiting in line. By combining the power of television with cutting edge technology, Impli gives advertisers unparalleled flexibility to reach consumers when and where they want.
iSpheres Corp., Oakland, provides real-time software applications that enable companies to manage dynamic opportunities that impact the profitability of their business.
Jenny Craig, Inc., Carlsbad, is one of the largest weight management service companies in the world, with services delivered through a chain of approximately 660 company-owned and franchised locations in the United States, Canada, Australia, New Zealand, and Puerto Rico.
KNI, Inc., Anaheim, is a leading manufacturer of soft and hard covered books, manuals, directories, catalogs and journals. The company is based in the Southern California market, where it maintains a complete in-house manufacturing operation.
Magis Networks, Inc., San Diego, is a leader in wireless broadband semiconductors, developing products that enable wireless communication of video, audio, and TCP/IP data throughout the home and office.
NanoMuscle, Inc., Antioch, manufactures products that displace small electromagnetic motors and solenoids in a variety of high volume applications for the home, car, and office. NanoMuscles are a classic “disruptive technology” offering superior performance, in a smaller package, at a fraction of the cost of the devices they replace.
nSpired Natural Foods, San Leandro, specializes in making tasty, all natural (and/or organic) healthy food alternatives possible for individuals who are on restricted diets, whether self-imposed or because of allergies or ingredient avoidance needs.
Nuera Communications, Inc., San Diego, is a leading provider of Voice-over-Internet Protocol (VoIP) infrastructure solutions that work over any medium (cable, wireless, copper and fiber).
PlaceWare, Inc., Mountain View, is a leader in real-time, “carrier class,” multimedia platform and application services for web-based communication and collaboration both inside and outside corporate firewalls.
Mimi’s Café, Tustin, serves classic American dishes, made from scratch, in a colorful, French New Orleans-inspired atmosphere in 66 cafes in California, Arizona, Colorado, Texas, Utah, Kansas, and Nevada.
Paper-Pak Industries, LaVerne, is the largest manufacturer in North America dedicated solely to the manufacture of absorbent mediums for the food packaging industry.
Skylight Systems, San Diego, is the fastest growing hospital services network and amenities provider in the nation. Through their two integrated products, GetWellTV and GetWellGifts, Skylight Systems offers a suite of state-of-the-art entertainment, information, and communications mediums that enhance the patient experience.
Terra-Kleen Response Group, Inc., San Diego, was created to provide a low-cost treatment alternative to landfilling PCB contaminated soils. The company has expanded the patented technology to treat soil, sediments, and ash contaminated with PCBs, Dioxins and Chlorinated Pesticides.
Women First HealthCare, Inc., San Diego, is a specialty pharmaceutical company that helps midlife women make informed choices regarding their health care and provides pharmaceutical products and lifestyle products to meet their needs.
© 2005. GKM Management LLC. All Rights Reserved.
