NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY. COMPETITIVE SOLICITATION For EARLY STAGE TECHNOLOGY VENTURE FUND INVESTMENT

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1 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY COMPETITIVE SOLICITATION For EARLY STAGE TECHNOLOGY VENTURE FUND INVESTMENT 1. INTENT / SUMMARY: The New Jersey Economic Development Authority ( Authority) is seeking qualifications and solicitation submissions from well-qualified venture capital firms to accept and manage a limited partnership investment in an early stage technology venture fund (the Fund ) with a focus on New Jersey. The purpose of the Fund will be to provide series A capital to businesses with locations primarily in New Jersey that have less than $3,000,000 in annual revenue. The Authority s objectives for this investment are two-fold: to achieve an early stage venture rate of return and to grow jobs in New Jersey technology businesses. The Authority has a maximum of $5,000,000 available for venture investment(s). 2. BACKGROUND: This funding was committed to the State of New Jersey from the federal government under the State Small Business Credit Initiative ( SSBCI ) which was created by the Small Business Jobs Act of The goal of this federal funding program is to achieve a public/private ratio of 1:10. The Authority s ultimate goal is to have the NJ businesses secure follow on funding (subsequent series A round) and realize a 1:15 public/private ratio. For more information on this federal program and in particular the venture fund initiative please visit: Under SSBCI, the Fund s portfolio companies should target an average business size of 500 full time equivalent employees or less, worldwide, and should not exceed a maximum business size of 750 worldwide, full time, employees. The Authority, in its sole discretion, may select one or two Funds to receive this limited partnership commitment. When preparing your response to this solicitation, keep in mind that, in the solicitation, the word shall or must denotes proposal items which are mandatory for a proposal to be deemed complete; the word should denotes proposal items which are recommended, but not mandatory; and the word may denotes proposal items which are permissible, but not mandatory.

2 SOLICITATION PROJECTED MILESTONE DATES: Solicitation Responses Due: Friday December 23, :00 PM, via electronic format only to Notice of Intent to Recommend Award for Consideration to Authority Board: January 31, 2012* Review and Consideration by Authority Board of Directors: February 14, 2012* Documentation and Contract Executed: March, 2012* The above dates are provided to interested fund managers for planning purposes only. These are estimated timeline dates and do not represent firm commitment dates by the Authority. 3. AVAILABLE FUNDING: The program will be funded with up to $5,000,000 through the Authority, which has a history of successful investment in the technology and life sciences sector. The terms of the Authority s investment will be governed by New Jersey law, which will be accomplished under a subscription agreement and through a side letter. The Authority s investments are expected to earn a reasonable rate of return, and Funds in which the Authority invests should demonstrate an ability to leverage private investment dollars and grow jobs in New Jersey. The Authority would consider awarding a smaller amount and dividing the $5,000,000 allocation among a maximum of two fund managers, at the Authority s sole discretion, but in all instances the $2/$1 NJ match (see section 6) must be maintained. The Authority will only consider a minimum award of $1,000,000 for NJ targeted early stage investments. The Authority will also only consider a limited partner commitment into a minimum Fund size of $20,000,000. The minimum Fund size of $20,000,000 will help to support the required overhead of the Fund. Even if the $5,000,000 is divided among two fund managers, the minimum Fund size to be considered is still $20,000, SUBMISSION REQUIREMENTS: This is a competitive solicitation. All interested fund managers must provide their submissions by 5pm EST on December 23, 2011 in order to be considered. You must submit your application in electronic format to SSBCIVentureFund@njeda.com. Only electronic submissions will be accepted.

3 Furthermore, please adhere to the following guidelines: a. Include a cover page with preparer s contact information. b. Include a table of contents that details all of the required evaluation criteria. c. Include page numbers. d. Must address each of the Solicitation Evaluation Criteria. e. Must submit all requested information denoted with a must or shall. 5. PROPOSAL EVALUATION CRITERIA AND REQUESTED INFORMATION SUBMISSION: In order to be considered, submissions must meet or exceed the following criteria, as each item below will be scored and weighed against competing bids. Readiness to proceed: The interested fund manager must supply a private placement memorandum. The interested fund manager must supply documentation regarding the Fund s infrastructure if not explicitly detailed in the PPM, including legal counsel, accounting firm, insurance provider, insurance policy summaries (including key man if available), and New Jersey office lease agreement (if available). The interested fund manager must provide an operating agreement for any applicable operating/management company. The interested fund manager must detail all other time commitments of the proposed team outside this proposed Fund. The interested fund manager must detail all board of directors seat(s) for the proposed investment management team, including observer seat(s). Commitment and Experience in NJ Technology Community: The interested fund manager must detail their history of engagement with the early stage New Jersey technology community over the prior twelve months. Be as specific as possible including partner name, events attended, board seats/meetings, etc. and dates. The interested fund manager must detail their anticipated and planned engagement and activities with the New Jersey early stage technology community post receipt of the proposed LP investment.

4 The interested fund manager must detail their strong historical sourcing of New Jersey deal flow. Be as specific as possible, including specific names, contact information, and year of contact with entity. The interested fund manager may also include general sources for proprietary deal flow for the early stage NJ technology sector. The interested fund manager must detail their New Jersey investment track record. Please include information on the specific company, the individual manager, and fund which is credited with the specific investment. Matching Funds (ability to leverage private capital): The Authority will be providing up to a $5,000,000 limited partnership investment. The successful fund manager must demonstrate that it has obtained a commitment, or a strong conditional Letter of Interest ( LOI ), at a minimum, for the first 1:1 match at application, in order to be considered for the award, with the requirement for another 1:1 match prior to the final award documents being executed. The minimum leverage goal of the program is for the initial matching of $2 of private sector to match the $1 of Authority committed funds. With the Authority s minimum leverage ratio requirement of 2:1, this means a matching requirement of $10,000,000 from other private investment sources (assuming the full $5,000,000 commitment), for a total minimum commitment of $15,000,000 to be invested in early stage New Jersey technology companies. Any committed funds in excess of the minimum required 2:1 match will be viewed favorably. At a minimum the Authority is looking for a $20,000,000 minimum fund size. All limited partner capital above the 2:1 requirement may be invested in businesses outside the state of NJ, and still satisfy the $20,000,000 minimum fund size requirement. The interested fund manager must list and provide supporting documentation of committed matching funds or strong Letter of Intent for the initial 1:1 required match. You must provide documentation of additional proposed matching funds to get to the required 2:1 matching prior to executing documents. Be as specific as possible, including names, sources and timing of funding for any second tier of soft circled matching funds. You must provide a roster of other limited partners, proposed or committed, to get to the minimum $20,000,000 fund threshold. Be as specific as possible including name, contact information and commitment amounts and/or anticipated commitment date.

5 Funding Model: The interested fund manager must be sure the responding PPM includes details on the investment thesis, relative to investment size, follow on reserves, targeted portfolio size, investment criteria. If responding, please be sure the thesis is targeted at series A investments in early stage technology companies within New Jersey. The interested fund manager must detail the individual/personal financial commitment of each individual manager of the Fund. The interested fund manager must provide projections for the number of NJ businesses to be funded and must include the average anticipated investment size. The interested fund manager must include the investment return split (i.e. carry), on a percentage basis, between the manager(s) and other LPs/Investors and details on the management fee if not already detailed in the PPM. The interested fund manager should detail all other professional commitments of the proposed managers. Investment Track Record: The interested fund manager must detail the investment track record of any and all prior funds (firm) that it has managed and must detail the individual investment track record for any of the proposed fund managers (individual). Be specific including deal name, location, investment size, return, and job growth during investment tenure and timeline. The interested fund manager must include references for all majority Limited Partners, which for purposes herein shall mean the three entities/individual which hold the largest percentage LP investment, in any other previous funds, and include all necessary contact information. A minimum of three references must be provided. The interested fund manager must include contact information for portfolio company management members, either prior or current, of both successful and unsuccessful investments. A minimum of three contacts must be provided, along with all necessary contact information. 6. SCOPE OF SERVICES / DELIVERABLES: When preparing the submission, the interested fund manager must consider the following deliverables as the minimum requirements of the performance against the resulting investment contract. The Authority will require the successful fund manager to have a physical (non-home based) office in New Jersey, which will be staffed by a partner of the Fund. If the

6 interested fund manager does not currently have such an office, the application should detail the anticipated location, and evidence of a lease will be required prior to final documents being signed. The Authority will require the successful fund manager to enter into a subscription agreement and side letter with the Authority governed by New Jersey law documenting the 2:1 matching requirement for early stage (defined for this purpose as companies with less than $3,000,000 in annual revenues) NJ technology company investments. The Authority will require the successful fund manager to provide quarterly financial statements and program updates in written form within 45 days of the end of each calendar quarter after the award documents are executed. The Fund updates must include detail on companies assisted- including but not limited to: industry, business specifics, location, jobs, and highlight on business advances. The quarterly report should also include updates on NJ technology community activities including events and marketing. As part of this submission, the interested fund manager should provide sample portfolio reports from current or prior portfolios. The Authority will require full transparency on the companies receiving funding and jobs grown, as such information may be requested by the federal government. Certifications from the portfolio companies relative to company name, jobs and receipt of benefit will be required. Preliminary form documents will be provided prior to final award. The successful fund manager will be required to supply certifications to the Authority relative to award and receipt of funds, and such certifications will be supplied to the federal treasury department. Preliminary form documents will be provided prior to final award. The Authority will require annual accountant prepared financial statements for the life of the partnership. The Authority will require a position on the Fund s advisory board. The Authority reserves the right to request other supporting documentation from an applicant to support approval of this investment. All documents submitted by the applicant are non-returnable to the applicant fund manager. The Authority reserves the right to modify, expand or delete any portion(s) of the scope of services. The Authority reserves the right to conduct interviews with the responding fund managers. The Authority reserves the right to terminate this solicitation for any reason.

7 The Authority also reserves the right to reject any proposal in its sole discretion. Incomplete proposals or proposals not received by the due date will result in the application not being reviewed or considered. 7. QUESTIONS and ANSWERS: Questions concerning this competitive solicitation may be submitted in writing via to and must be received at or before 5:00 PM prevailing local time on Monday, December 12, Phone calls / faxes shall not be accepted. The subject line of the should state: SSBCI Venture Fund Competitive Solicitation. All answers to the questions submitted within the required timeline for this solicitation will be posted to the Authority s website - as soon as available, but in no event later than Friday, December 16, 2011 at 5:00 PM Confidentiality: Applications received will be reviewed only by the Authority and its board of directors. All proposals submitted will be subject to requests for disclosure, including but not limited to, a request pursuant to the Open Public Records Act ("OPRA"), N.J.S.A. 47:1A-1 et seq. If the applicant believes that information contained in its proposal merits confidential treatment pursuant to OPRA, any such purportedly confidential information submitted to the Authority shall be specifically identified and marked by the applicant.