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June 01, 2023 | Tom Ballard

EDA opens applications for 2023 Build to Scale program

Up to $50 million available for two types of competitions. One is the Venture Challenge, the other is known as the Capital Challenge.

The U.S. Economic Development Administration (EDA) has opened another round of applications for the 2023 edition of its $50 million Build to Scale (B2S) program that supports projects that strengthen equitable ecosystems and increase access to capital for innovators, entrepreneurs, and start-ups.

In an announcement on June 1 and an accompanying Notice of Funding Opportunity (NOFO), the federal agency emphasized that the program is intended to build regional economies by supporting scalable start-up ecosystems through entrepreneurial support organizations as well as helping communities and regions grow technology-driven businesses; create high-skill, high-wage jobs; and build the industries of the future.

The application deadline is July 28 for the FY23 B2S program which is comprised of two competitions – the Venture Challenge and the Capital Challenge. The first opportunity supports programs that enable high-growth technology entrepreneurship and foster inclusive access to proven entrepreneurship support models. The Capital Challenge increases access to capital in communities where risk capital is in short supply by providing operational support for early-stage investment funds, networks, and training programs that focus on both traditional and hybrid equity-based financing.

As described in the NOFO, funding for the Venture Challenge is available at three levels: Build, Scale, and Ignite. Venture Challenge Build applicants may request up to $750,000 over the period of performance, and Venture Challenge Scale applicants must request more than $750,000 and may request up to $2,000,000 over the period of performance. EDA expects the period of performance for these two levels to be approximately three years.

Venture Challenge Ignite applicants may request up to $300,000 over the period of performance, which EDA expects will be approximately 18 to 24 months. If the applicant needs a shorter or longer period of performance, the applicant should include in the application a justification, and EDA will review and choose to accept that justification for any of the funding levels.

The Capital Challenge provides operational support for the formation, launch, or scale of investment funds that seek to raise equity-based capital to deploy in scalable startups (e.g., angel, seed, or venture funds) or Section A 6 of organizations that expand equity-based capital access and deployment within a community, region, or regional industry (e.g., angel networks or investor training programs). The Capital Challenge does not support strictly debt-based capital. Funding for the Capital Challenge is available at two levels: Form and Deploy.

Capital Challenge Form applicants may request up to $400,000, while Capital Challenge Deploy applicants must request more than $400,000 and may request up to $750,000 over the period of performance, which EDA expects will be approximately three years unless the applicant clearly justifies a shorter or longer period of performance and EDA accepts that justification. Although Capital Challenge applicants should operate investment vehicles that raise equity or equity-based capital and deploy that capital into scalable technology businesses, funding must primarily support operational and programmatic costs and may not be used as investment capital.

EDA plans to award no less than $40 million under the 2023 Venture Challenge and no less than $8 million under the 2023 Capital Challenge.

Eligibility is open to cities, counties, states, other political subdivisions of states, and Indian tribes; or entities supported by a state or political subdivision of a state that is one of the following: a nonprofit organization, institution of higher education, public-private partnership, science or research park, federal lab, venture development organization, economic development organization, or a consortium of any of the aforementioned.

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