A Long Island venture capital fund is among six that will share $26.5 million in government money to be invested in new technology companies across the state, officials said Tuesday.
Canrock Ventures Llc will receive $4.5 million and then raise double that amount from private investors. The pool of money, expected to total $13.5 million, will launch about 12 tech start-ups in Nassau and Suffolk counties.
Jericho-based Canrock was among 21 venture capital groups vying for investment dollars from the Innovate New York program, established last year by Gov. Andrew M. Cuomo and the State Legislature. The U.S. Treasury Department contributed $25 million to the initiative and the state, $1.5 million.
The board of Empire State Development Corp. Tuesday approved the allocations. Which small tech businesses receive aid is up to the venture capitalists.
"As small businesses grow, so grows New York's economy," said Kenneth Adams, Cuomo's economic development czar. The Innovate New York program "will help attract tens of millions of dollars in new investment for innovative entrepreneurs to grow their businesses and to create over 2,200 jobs."
Innovate New York isn't the only vehicle used by the state to invest in promising companies. The Common Retirement Fund, overseen by state Comptroller Thomas DiNapoli, earmarks pension money to support New York businesses.
With Tuesday's award, Canrock executives said they plan a second round of investments in small tech start-ups.
The fund, begun two years ago, has poured $11 million so far into more than a dozen companies, mostly on Long Island. These include Karma411, which specializes in social fundraising; General Sentiment, which analyzes opinions about brands, products and politics, and CooCoo, which provides real-time train schedules.
"We like to walk to our investments rather than drive or take an airplane," said Canrock partner and managing director Mark Fasciano. He prefers having the companies he backs nearby so he can offer advice.
Fasciano co-founded Fat- Wire Software in 1997 in a bedroom of the Oyster Bay Cove home where he was reared. Several years later he sold the business, which manages Web content, to an investor group for reportedly several million dollars. FatWire, now in Mineola, is a unit of Oracle Corp. with yearly sales of about $40 million.
Canrock's other partners, Jim Estill and Ted Smith, also have experience starting and running companies in the United States and Canada.
Fasciano said Canrock typically invests $500,000 in a start-up to get its product or service into the marketplace and then a further $1 million to establish operations. After that, he said, the company should be able to be independent and attract other investors.
Development corporation officials said Tuesday they hope the state will recoup the investment money and then some. The proceeds then can be used to back other new tech companies.
Steven Cohen, the corporation's deputy commissioner, said Canrock and the others "are quality investment entities that will allow us to invest in small businesses . . . and to get a return."
Six venture capital funds across New York State were awarded a total of $26.5 million on Tuesday, most of it from the federal government, to invest in promising small businesses. The funds that could help Long Island, the amount of government money awarded and their investment concentration are:
CANROCK VENTURES Llc: $4.5 million to invest in tech start-ups;
GOLDEN SEEDS: $4 million for women-owned companies;
STONEHENGE CAPITAL CO.: $5 million for health care, information technology and bioscience firms.
SOURCE: Empire State Development Corp.