Section 10-10-11. Definitions

   As used in this article, the term:

   (1) "Affiliate" means:

      (A) A person who, directly or indirectly, beneficially owns, controls, or holds power to vote any outstanding voting securities or other voting ownership interests of a venture capital firm; or

      (B) A person whose outstanding voting securities or other voting ownership interests are directly or indirectly beneficially owned, controlled, or held with power to vote by a venture capital firm.

   (2) "Board" means the Invest Georgia Board created under Code Section 10-10-12.

   (3) "Center" means the Advanced Technology Development Center.

   (4) "Contributed capital" means the amount of money contributed to the Invest Georgia Fund by any authorized method.

   (5) "Designated capital" means the amount of money committed and invested by the Invest Georgia Fund into individual early stage venture capital funds or growth stage venture capital funds.

   (6) "Early stage venture capital fund" means:

      (A) A fund that has at least one principal employed to direct the investment of the designated capital;

      (B) A fund whose principals have at least five years of experience in the venture capital, angel capital, or private equity sector by investing primarily in Georgia domiciled companies or a fund whose managers have been based, as defined by having an office, in the State of Georgia;

      (C) At the discretion of the fund administrator and the board, one or more early stage venture capital funds that are first-time Georgia based funds, so long as the fund managers have at least five years of experience in venture capital or angel capital investing in Georgia based business enterprises; and

      (D) A fund which has as its primary investment strategy the achievement of transformational economic development outcomes through focused investments of capital in seed or early stage businesses with high growth potential. The fund principals must have demonstrated the ability to lead investment rounds, advise and mentor entrepreneurs, and facilitate follow-on investments. A minimum of 10 percent of the committed capital of the fund must be committed by the institutional investors, fund principals, or other accredited investors.

   (7) "Fund administrator" means a state appointed investment advisory firm consisting of experienced investment professionals that will actively pursue investment opportunities for the State of Georgia. The investment advisory firm will evaluate and select Georgia based venture capital funds, in conjunction with the Invest Georgia Board, through a rigorous due diligence process.

   (8) "Growth stage venture capital fund" means:

      (A) A fund having its principal office and a majority of its employees in Georgia that has at least two principals employed to direct the investment of the designated capital;

      (B) A fund whose principals have at least five years of experience in the venture capital, angel capital, or private equity sector by investing primarily in Georgia domiciled companies or a fund whose principals have been based, as defined by having an office in the State of Georgia; and

      (C) A fund which has as its primary investment strategy the achievement of transformational economic development outcomes through focused investments of capital in growth stage businesses with high return potential. The fund principals must have demonstrated the ability to lead investment rounds, advise and mentor entrepreneurs, and facilitate follow-on investments. A minimum of 50 percent of the committed capital of the fund must be committed by the institutional investors, fund principals, or other accredited investors.

   (9) "Invest Georgia Fund" means the fund created under the provisions of Code Section 10-10-15 to hold the money collected for the purposes of this article.

   (10) "Qualified distribution" means any distribution or payment by the Invest Georgia Fund in connection with any of the following:

      (A) Costs and expenses of forming, syndicating, and organizing the Invest Georgia Fund, including fees paid for professional services, and the costs of financing and insuring the obligations of the Invest Georgia Fund, provided such payments are not made to a participating investor;

      (B) An annual management fee in accordance with a fund's partnership agreement, and consistent with such fund's other private investors, to offset the costs and expenses of managing and operating the Invest Georgia Fund; or

      (C) Reasonable and necessary fees in accordance with industry custom for ongoing professional services, including, but not limited to, legal and accounting services related to the operation of the Invest Georgia Fund, but not including any lobbying or governmental relations.

   (11) "Qualified early stage business" or "seed" business means a business that, at the time of the first investment in the business by a venture capital firm:

      (A) Has its headquarters located in the State of Georgia;

      (B) Has its principal business operations located in the State of Georgia and intends to maintain its principal business operations in this state after receiving an investment from the venture capital firm. In order to discourage the business from relocating outside Georgia within three years from the date of an initial investment, the investment in the business shall be subject to redemption by the venture capital firm within one year from the time the business relocates its principal business operations outside this state, unless the business maintains a significant presence in Georgia as determined by relative number of employees or relative assets remaining in Georgia following the relocation;

      (C) Has 20 or fewer employees;

      (D) Has a current gross annual revenue run rate of less than $1 million;

      (E) Has not obtained during its existence more than $2 million in aggregate cash proceeds from the issuance of its equity or debt investments, not including commercial loans from chartered banks or savings and loan institutions; and

      (F) Does not engage substantially in:

         (i) Retail sales;

         (ii) Real estate development or construction;

         (iii) Entertainment, amusement, recreation, or athletic or fitness activity for which an admission is charged;

         (iv) The business of insurance, banking, lending, financial, brokerage, or investment activities;

         (v) Natural resource extraction, including, but not limited to, oil, gas, or biomass; or

         (vi) The provision of professional services by accountants, attorneys, or physicians.

   A business classified as a qualified early stage business at the time of the first qualified investment in such business shall remain classified as a qualified early stage business and may receive continuing qualified investments from venture capital firms participating in the Invest Georgia Fund. Continuing investments shall constitute qualified investments even though the business may not meet the definition of a qualified early stage business at the time of such continuing investments.

   (12) "Qualified growth stage business" means a business that, at the time of the first investment in the business by a venture capital firm:

      (A) Has its headquarters located in the State of Georgia;

      (B) Is a corporation, limited liability company, or a general or limited partnership located in this state;

      (C) Has its principal business operations located in the State of Georgia and intends to maintain its principal business operations in this state after receiving an investment from the venture capital firm. In order to discourage the business from relocating outside Georgia within three years from the date of initial investment, the investment in the business shall be subject to redemption by the venture capital firm within one year from the time the business relocates its principal business operations outside this state, unless the business maintains a significant presence in Georgia as determined by relative number of employees or relative assets remaining in Georgia following the relocation;

      (D) Has 100 or fewer employees;

      (E) Has a current gross annual revenue run rate of more than $1 million; and

      (F) Does not engage substantially in:

         (i) Retail sales;

         (ii) Real estate development or construction;

         (iii) Entertainment, amusement, recreation, or athletic or fitness activity for which an admission is charged;

         (iv) The business of insurance, banking, lending, financial, brokerage, or investment activities;

         (v) Natural resource extraction, including, but not limited to, oil, gas, or biomass; or

         (vi) The provision of professional services by accountants, attorneys, or physicians.

   A business classified as a qualified growth stage business at the time of the first qualified investment in such business shall remain classified as a qualified growth stage business and may receive continuing qualified investments from venture capital firms participating in the Invest Georgia Fund. Continuing investments shall constitute qualified investments even though the business may not meet the definition of a qualified growth stage business at the time of such continuing investments.

   (13) "Qualified investment" means the investment of money by the Invest Georgia Fund in each early stage venture capital fund or growth stage venture capital fund selected by the fund administrator.

Code 1981, § 10-10-11, enacted by Ga. L. 2013, p. 243, § 5/HB 318.