Puerto Rico Venture Capital Access Program

FAQs 

How do I apply?

You can visit www.parallel18.com/vcap and click the application button in Spanish or English based on your language preference. There are no differences in application form other than translation.

Please note that we are unable to share the submitted application answers, thus, make sure to request a copy at the end of the application form portal.

Are the investments made through the VCAP considered a grant or an equity investment?

The VCAP makes direct equity co-investments which means that it serves through a matching mechanism that is discretionary in terms, requires a co-investor to match, and seeks to invest in high-growth enterprises based in Puerto Rico with the potential to make an economic impact within the Island.

Which types of financial instruments can we apply for?

The VCAP is a direct equity co-investment mechanism, thus only equity-like instruments are considered. The VCAP is unable to consider debt, debt derivatives or any similar instruments. Common stock, preferred shares, and SAFEs, among similar instruments, qualify as they are equity-like instruments.

Where can I find the information relating to the use of investment capital from the VCAP?

You can find the SSBCI guidelines, including the use of proceeds here.

How does the VCAP determine if a company is based in Puerto Rico?

The company is either registered to do business in the Commonwealth of Puerto Rico, has headquarters in Puerto Rico and the company publicly claims to be a Puerto Rico-based company, the founders or co-founders are Puerto Rico residents, or the company has an active lease for an office that corresponds with the headquarters of the company in Puerto Rico.

What are the key focus areas of the VCAP?

The VCAP is sector and industry agnostic but is interested primarily in high-growth ventures that align with Puerto Rico’s current economic development strategies including Biopharmaceuticals & Life Sciences, Financial Technologies & Services, Energy, Manufacturing & Supply chain logistics, DeepTech & Artificial Intelligence, to mention a few.

Can I apply for consideration without having raised investment capital?

The program is established as a direct co-investment program. Applicants are required to have secured or soft-committed a lead investor prior to being considered for a co-investment.

Does my company qualify for consideration through the Venture Capital Access Program?

Based on the established SSBCI Guidelines by the U.S. Treasury, the VCAP shall refrain from investing in any Investee entity that falls under the following categories:

1. Employing 750 or more personnel. 
2. Aggregating funds, in conjunction with the Program’s contribution or the proposed investment by the venture capital fund, exceeding $20,000,000 within the relevant investment round. This encompasses capital amassed from future issuances of the identical series of securities transacted in said investment round.
3. Engaging in speculative activities that gain from fluctuations in pricing, such as wildcatting for oil or engaging in commodities futures trading. The exception lies in instances where these activities are subsidiary to the ordinary operations of the enterprise and form a legitimate risk mitigation strategy against price fluctuations inherent to regular operations or standard trade.
4. Generating over half of its yearly net revenue from direct lending pursuits facilitated by its own capital, unless it qualifies as either (1) a Community Development Financial Institution (CDFI) that isn’t a depository institution or bank holding company or (2) a Tribal enterprise lender not associated with a depository institution or bank holding company.
5. Being involved in pyramid sales, where a participant’s key incentive originates from the sales generated by an ever-increasing number of participants. It is important to note that a lawful multi-level marketing enterprise is distinct from an entity partaking in pyramid sales.
6. Engaging in activities barred by federal law or, if allowed by federal law, the relevant legislation in the jurisdiction where the enterprise operates. This encompasses businesses involved in producing, selling, servicing, or distributing products or services connected to illegal activities, excluding instances where such usage can be proven to be entirely unrelated to the enterprise’s intended market. This category includes both direct and indirect marijuana enterprises, as elucidated in Small Business Administration (SBA) Standard Operating Procedure (SOP) 50.10.61.
7. Deriving more than one-third of its gross annual revenue from lawful gambling pursuits, unless the business is a participant in the Tribal State Small Business Credit Initiative (Tribal SSBCI). In this context, a Tribal SSBCI participant is prohibited from utilizing SSBCI funds for gaming activities, yet remains unrestrained in employing SSBCI funds for non-gaming endeavors due to an organizational association with a gaming enterprise. Within Tribal SSBCI programs, the term “gaming activities” exclusively encompasses “class II gaming” and “class III gaming,” as elucidated in the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. § 2703.
8. Any other entity proscribed by the Program as ineligible for investment from time to time.

Which entity is allocating the funds and/or considered the investor of the VCAP?

The Economic Development Bank of Puerto Rico (“Banco de Desarrollo Económico de Puerto Rico” in Spanish) is the investor.

How much capital do I need for a match to be compliant with the requisites of the program?

A minimum 1:1 capital match is suggested from co-investors at the business level with the initial VCAP investment as stated in the SSBCI guidelines. SSBCI funds must be the “cause and result” of the private investment into the business, which must be documented.

What are the ticket sizes for investment through the VCAP?

The average investment amount ranges from $250,000 to $2.5 million alongside accredited investors (e.g. angel investors, institutional investors, venture capitalists, etc.)

What does the process after application look like?

After submitting the application, the due diligence team will revise the information, clean and organize the applicant’s profile, and may follow-up with additional requests depending on the nature of the business and the nature of the financing requested. Do note that given the high volume of applications, the program may take anywhere from 2-3 months to issue a response whether favorable or not. 

How often are deployments expected to happen?

The VCAP intends to review applications and make decisions on a quarterly basis.