An initial search failed to find qualified venture capital firms from Long Island or New York City to participate in a new state fund to boost innovation, a state official said Thursday.
Empire State Development, the state's primary business-aid agency, allotted $5 million to three upstate firms Thursday for investments in small businesses that are turning inventions from universities and research institutions into commercial products.
The money is from the $50 million New York State Innovation Venture Capital Fund, launched last Friday by Gov. Andrew M. Cuomo.
Each investment by a venture firm can be up to $100,000 and must be matched dollar for dollar with private money.
Brian Keil, the fund's managing director, Thursday said Empire State Development was going to try again to interest downstate venture capital firms.
"Originally, we had hoped to find firms that would cover the entire state out of that single RFP [Request For Proposals]" in July, he told the agency's board of directors.
"We found the best candidates in this particular case covering the upstate region. We are issuing a second RFP to cover the downstate region," he said.
Later, an Empire State Development spokeswoman said downstate venture firms have until Jan. 16 to apply. New York City is home to the most venture firms in the state.
Keil said the fund wants to "bring technologies out of research labs [and] universities to really jump-start innovation across the state. "
He joined Empire State Development a few months ago after working as managing director of a $250 million venture fund sponsored by NBC Universal and GE Capital.
The state fund also has a seed- and early-stage co-investment component under which technology startups can receive investments from $100,000 to $5 million.
The fund will complement, not replace, the Innovate NY Fund, which also invests in startups and consists of $35 million from the U.S. Treasury and $10 million from Goldman Sachs.
In 2012, Empire State Development designated seven venture capital firms across the state to invest Innovate NY funds in promising startups. Two of the three firms selected Thursday for the new fund also participate in Innovate NY.