Purpose: The VAF fund seeks to improve the economy of Los Alamos Connect northern New Mexico by providing a unique source of funding to companies who are on track to add jobs, grow revenues, or attract follow-on investment. It is a program managed and administered by the Regional Development Corporation, whose aim is to create and retain jobs in northern New Mexico.

VAF Funding: VAF financing is useful for companies that are not ready for equity investment, but unable to get bank financing. It is also useful for companies who will not need additional investment but can use a one-time cash infusion to achieve growth goals.

The money comes in the form of an interest-free, no-collateral loan that gets paid back under certain conditions. Although awards can be up to $100,000 per company, due to high demand in recent years the average award has been lower than that and projects are often funded at a lower amount than requested. In 2014, the median award was $45,000.

Companies selected for VAF do not give up any equity by accepting the funding. The award must be repaid upon the company:

• being purchased within 5 years of funding (immediate repayment in full)
• leaving the state within 5 years of funding (immediate repayment in full)
• achieving certain revenue targets within years 2 and 5 after being awarded the funds (repayment timetable based on negotiation)

The “payback” is designed to help grow the fund so that in the future, more companies can be awarded and the fund will become independent of the need for regular fundraising.

Once the application period is complete, a panel of judges evaluates the applications and selects a subset of companies to present their projects in person. The format is generally a brief presentation followed by Q&A. In 2015, these meetings will occur on April 15 and 16th. The judging panel then selects awardees from this group. The judging panel consists of entrepreneurs, previous VAF awardees, investors, and economic development experts.

Industry: Technology-driven or manufacturing companies are eligible to apply for VAF.

Stage: Although the bulk of companies awarded VAF funds tend to be less than two years old, an established company can apply as long as it can show why VAF funding is more appropriate than traditional financing such a lines of credit, loans, etc. and if it can tie receipt of VAF funding to a major impact (such as entering a new market, significantly growing jobs or revenues, etc.)

Presence in New Mexico: The company needs to have a significant presence in New Mexico. VAF gives preference to companies located in Los Alamos, Santa Fe, Sandoval, Taos, Rio Arriba, Mora, and San Miguel counties.

Market traction: Companies must show that there is a viable market for their product. VAF will not fund R&D projects for which no real commercial application can be shown.

Regional Impact: The purpose of VAF is to help build the economy in northern New Mexico by creating jobs, growing the tax base, or otherwise bettering the community financially.

Team: We want to know that the right people are on board (or that you know what skills are missing and have a plan for obtaining them).

Milestones: VAF will not fund general development work. Each proposal must outline concrete tasks that the funding will help achieve (and show how these milestones advance the commercial progress of the company). Payment is only made once a milestone has been completed. 

Matching Funds: Companies must show that they are willing to provide a match—in the form of either money or an in-kind contribution of labor, etc.—for every dollar they request from VAF.

Connection to Los Alamos National Laboratory: Because this fund was originally developed by LANL, we will give a small preference to companies who have licensed LANL IP, were founded by LANL employees, or who participated in a New Mexico Small Business Assistance (NMSBA) project with LANL.

VAF monies cannot be used to pay for internal LANL projects, or to pay for LANL staff performing work at LANL. Companies who were previously VAF awardees are not eligible to apply for follow-on funding in the Spring 2015 VAF call. This policy is revisited each call based on the size of the fund.

Contract:  The awarded company must sign a loan agreement with the Regional Development Corporation and agree to complete certain mutually agreed-upon milestones in order to receive payment. After a small up-front payment, the remaining payments are made only after each milestone has been completed.

Follow-up: The awarded company is required to report on jobs, revenues and investment during the funding engagement, and annually for five years afterwards.

Updated February 2015

Note:  When necessary, the Regional Development Corporation (RDC) (on behalf of Los Alamos National Security, LLC, Los Alamos County, Santa Fe County, NM MEP, and the City of Santa Fe) will ensure that fairness of opportunity compliance has been achieved and that any potential conflicts of interest on the part of applicants or reviewers are appropriately mitigated.

Project Requirements

Companies selected for VAF will sign a 0% interest loan agreement with RDC.

Within the agreement is a payback trigger whereby, as a condition of funding, companies will need to agree to repay the funds if the company is acquired, achieves certain revenue goals, or leaves New Mexico. The purpose of this “evergreen” component is to help make the fund sustainable in order to support future entrepreneurs. Companies will begin to be evaluated the year after they completed their VAF to determine if they meet any of the criteria for a repayment. If they do, a repayment plan will be developed between the company and the RDC.

The term of a VAF is typically 12 months from the time the loan agreement is finalized with RDC. Projects may be eligible for no-cost extensions. Approximately 90 percent of the award will be paid incrementally based upon completion of the project milestones with one advance payment of no more than 20% of the total award to begin work. Recipients are responsible for gross receipts taxes incurred.

At a minimum, a VAF recipient is expected to produce and submit two types of reports over the term of the project:

• Periodic oral and/or written reports to track progress against milestones. This includes a final report, for which 10 percent of the total award will be withheld until satisfactory completion.
• Success stories to share with other entrepreneurs, companies, venture capitalists or strategic partners.

VAF recipients are expected to complete the project as described in the statement of work within the loan agreement. Recipients unable to complete performance within the proposed schedule and cost may be granted an extension at the discretion of fund administrators but shall not be entitled to additional incremental funding. Failure to meet scope, schedule, and funding terms of the project may negatively affect future proposals submitted by the recipient under later announcements. The RDC retains the right to cancel agreements for failure to meet scope, schedule, funding terms, or to satisfactorily submit required milestone deliverables and progress reports.

Conditions of VAF Program

The RDC reserves the right to:

• Request additional information to assist in the review process
• Require new proposals from interested parties
• Fund any proposal in full or in part
• Reject any or all proposals responding to this announcement

As a matter of convention and practicality, confidentiality agreements are not signed as part of the VAF program; however, access to the applications is only granted to the VAF Team, VAF funders, and the judging panel, all of whom realize that applications must be treated as sensitive. If this is a concern to you, before submitting your application, confirm with appropriate advisors or legal counsel that any intellectual property described in your application is appropriately protected. We expect that most entrants will be able to present a compelling business case without divulging unprotected proprietary information.

The VAF is a collaborative investment in the northern New Mexico economy managed by the Regional Development Corporation and established by Los Alamos National Security, LLC (LANS) in 2006. This year LANS, along with Los Alamos County, New Mexico Manufacturing Extension Partnership (MEP), Santa Fe County and the City of Santa Fe are investing in the economic health of New Mexico via their support of growth-oriented companies. The fund is administered by the Regional Development Corporation of Española, New Mexico (www.rdcnm.org).