Certified Capital Companies (CAPCO) Program
The CAPCO Program was created by the Colorado Legislature with the goal of making venture capital funds available to new or expanding small businesses throughout Colorado.
CAPCO Program Documents
The following questions and answers are provided for general information purposes. The CAPCO legislation and regulation provide specific program detail.
- What is the CAPCO Program?
- Why a CAPCO Program for Colorado?
- What Does 'CAPCO' Mean?
- How Does the CAPCO Program Work?
- Is the CAPCO Program Still in Operation?
- When will CAPCO Money Be Available to Colorado Businesses?
- How Can a Colorado Business Receive Funding from a CAPCO?
- How Does a Colorado Business 'Qualilfy' Under This Program?
- What is the Maximum Level of Funding that a CAPCO can Provide to a Colorado Business?
- Will the CAPCO Program Help Business Located in Rural Parts of the State?
- Will the CAPCO Program Help Business Located in Distressed Urban Communities within the State?
The CAPCO Program was created by the Colorado Legislature with the goal of making venture capital funds available to new or expanding small businesses throughout Colorado.
Why a CAPCO Program for Colorado?
The CAPCO Program is anticipated to create new employment opportunities within the state and to stimulate economic growth.
'CAPCO' means a Certified Capital Company. A CAPCO is a for-profit business organized to provide venture capital funds to 'qualifying' Colorado businesses. The application process to become a CAPCO is now closed.
How does the CAPCO Program work?
The State of Colorado provided $100 million for this program in the form of premium tax credits. The $100 million in premium tax credits were given to insurance companies in exchange for the insurance companies giving $100 million in cash to the CAPCOs. The CAPCOs then use these funds to invest in qualifying Colorado businesses.
Is the CAPCO Program still in operation?
The CAPCO program is still in operation. The Colorado legislature initially made $200 million in premium tax credits available for this program. However, the 2004 legislature redirected $100 million of the premium tax credits to other programs. The CAPCOs are currently investing the $100 million pool of cash received in April 2002, in Colorado businesses. Please contact the 6 CAPCOs to determine funding availability.
When will CAPCO money be available to Colorado businesses?
The CAPCOs are currently investing in qualifying Colorado businesses, and will continue to invest in qualifing Colorado businesses generally until all of the $100 million fund has been invested or until 2012, whichever comes first.
How can a Colorado business receive funding from a CAPCO?
There are certain minimum requirements that a Colorado business must meet in order to qualify for this program. These minimum requirements are contained in the legislation and regulation for this program. Except for these specific, minimum requirements, each CAPCO has complete flexibility in determining the types of investments it will consider. Colorado businesses should contact individual CAPCOs directly to determine if the business meets the minimum program requirements and if the business is one that the CAPCO would consider in general. Each CAPCO will independently provide application and approval information to businesses seeking funding. The list of CAPCOs is available on-line.
How does a Colorado business 'qualify' under this program?
At a minimum, the legislation and regulation for this program state that a business must generally meet ALL of the following conditions as of the time of a Certified Capital Company's first investment in the business to 'qualify':
- the business must be headquartered in Colorado and its principal business operations must be located in Colorado (principal business operations is defined as having more than 50% of the business's total assets physically present in Colorado; and more than 50% of the business's net income is allocable to Colorado in accordance with Colorado income tax law, regardless of whether the business is taxable or tax-exempt for Colorado income tax purposes; and more than 75% of the business's existing total salaries, wages and/or other compensation are paid to Colorado employees, calculated on a full-time equivalent basis);
- the business must meet the United States Small Business Administration's (SBA) definition of a 'small business concern' which is contained in the SBA's small business size regulations (available on-line at http://www.sba.gov/size/)
- the business must not be predominantly engaged in:
- professional services provided by accountants or lawyers;
- banking or lending ;
- real estate development;
- insurance;
- oil and gas exploration
- direct gambling activities, which shall not include ancillary gambling equioment and other indirect gambling activities such as manufacturing of gambling machines, etc.; or
- business that make loans to or invest in a Certified Captial Company or an affiliate of a Certified Caital Company or Insurance Company.
- prior to making any Qualified Investment in the form of debt or a convertible instrument which could result in debt or debt characteristics, then the CAPCO shall submit or maintain, as applicable, the following information for the Office's review:
a. the business must be unable to obtain bank financing for all or a portion of the funds that it needs;
b. if the business is located in a primarily rural area, the business must be unable to obtain all or a portion of the funds from the Business Loan Fund that serves the business's location; - the business must be located in an area that is eligible for the funds that a CAPCO has available;
- the CAPCO must determine that the business is one which meets the general investment requirements that have been established by each CAPCO; and
- other requirements, as applicable, based on the investment structure of the CAPCO.
Colorado businesses seeking funding should contact the CAPCOs directly for the CAPCO's determination of whether the business 'qualifies' under the state's minimum requirements and whether the business is one that the CAPCO is willing to consider. The list of CAPCOs is available on-line.
What is the maximum level of funding that a CAPCO can provide to a Colorado business? How long will it take?
The legislation for this program states that a CAPCO may invest up to 15% of the funds that it receives from insurance companies in any qualifying Colorado business. However, each CAPCO may set different maximum investment levels for individual businesses as long as it meets the 15% maximum restriction. Additionally, a CAPCO shall not own more than 49% of any one Qualified Business through the initial Qualified Investment in the business. Each CAPCO may establish varying review processes that result in a variety of processing times. Businesses seeking funding should contact the CAPCOs directly to determine each CAPCO's maximum level of funding and the timeframe. The list of CAPCOs is available on-line at.
Will the CAPCO Program help businesses located in rural parts of the state? WHhat defines a rural part of the state?
The legislature set-aside $25 million from the $100 million pool of funds for use in rural counties only. Additionally, the legislature provided an incentive for the CAPCOs to use funds from the $75 million statewide pool for businesses located in rural counties and in economically distressed urban communities.
The legislation has defined designated rural counties. The following do not qualify as designated rural counties for the purposes of this program: Adams, Arapahoe, Broomfield, Boulder, Denver, Douglas, Eagle, El Paso, Fremont, Garfield, Jefferson, Larimer, Summit, Teller, Weld. However, businesses in these counties are eligible to request funding from the $75 million statewide pool.
All other counties in the State qualify as designated rural counties under this program.
Will the CAPCO Program help businesses located in disressed urban communities within the state? What defines a distressed urban community?
The legislature provided an incentive for the CAPCOs to use funds from the $75 million statewide pool for businesses located in rural counties and in economically distressed urban communities. A distressed urban community for the purpose of this program is any area within the list of counties that is not a designated rural county (listed above) and that has been designated as an Enterprise Zone by the Colorado Economic Development Commission. Click here for a list of Local Enterpise Zones.
For further information, please contact:
John Reece or Alice Kotrlik
Business Finance Staff
1625 Broadway, Suite 2700
Denver, CO 80202
(T) 303-892-3840
(F) 303-892-3848
1 (800) 659-2656 TDD