NEW YORK – As its city faces an unprecedented rebuilding effort, the New York venture capital community is joining in the recovery efforts. The New York City Investment Fund (NYCIF) has launched the Financial Recovery Fund to assist businesses affected by the terrorist attacks of Sept. 11. In addition, the NYCIF has also unveiled a mentor program to match venture capitalists with struggling businesses that need help getting back on their feet.
“The future of downtown depends on a strong and growing technology center, so hopefully we can raise a decent size fund and help companies in the downtown area-because those business will have expenses soon and need cash to pay their rent and turn their lights back on,” said Kathyrn Wylde, president of the NYCIF and the New York City Partnership. The fund has an initial target of $10 million and will focus on aiding a broad range of companies with 10 or more employees, Wylde added.
The vehicle will provide each company it funds with between $50,000 and $100,000 of capital, she noted. It is still unclear exactly what form the assistance will take initially, Wylde said. “At first the money might look like grants, but it could end up being structured as a loan or even equity. We are starting from scratch right now and at best this is true angel funding,” she said.
The NYCIF is hoping to raise some of the capital for the Recovery Fund from philanthropic organizations such as the United Way, which has indicated that some of the money it has raised for general disaster relief could go toward businesses affected by the terrorist attacks, Wylde said. The NYCIF will also solicit funds from banks and members of the broader New York private equity community, she added.
The second prong of the NYCIF’s efforts is the mentor program, which is being organized by Jerry Colonna, a managing partner at Flatiron Partners, Wylde said. “Many of these companies, need someone to be their advocate now and help them understand what has happened to their business and what they need to do going forward,” she added.
“VCs spend many hours each day counseling small businesses and helping them get through each day,” Colonna said. “We have unique skills applicable to small business that need our help and might not have had a board of directors to aid them.” The idea is for mentors to devote, perhaps, one day a week to the companies they work with in a long-term relationship, he said. Colonna sent out an email to all his industry contacts recruiting volunteers and also helped the National Venture Capital Association (NVCA) in soliciting its members for help. The NYCIF is in the process of building a database of VCs willing to participate in the mentoring program, he added.
The NVCA is attempting to aid the NYCIF efforts by encouraging its members in the area to be as active as possible, said Mark Heesen, president of the NVCA. While an informal survey of its members indicated that VCs nationwide have contributed $2.5 million to the country’s relief efforts, to go along with the $25,000 contributed by the NVCA itself, the key role VCs will play in helping the country rebuild is lending their experience and intelligence to the White House, Heesen said.
“VCs can work with the Bush administration on some panels that are being put together in areas where VCs have knowledge. VCs are good at showing holes in proposals,” Heesen said, pointing to Jim Barksdale, a partner with The Barksdale Group, who was named to the President’s Foreign Intelligence Advisory Board (PFIAB) in early October. PFIAB provides advice to the President about the quality and adequacy of intelligence collection, counterintelligence and other intelligence activities, according to the White House Web site. A spokesperson for Barksdale declined comment when asked what Barksdale’s responsibilities as a PFIAB member entailed.