Texas Certified Capital Companies (CAPCOs) are government-sponsored, private venture capital companies formed to stimulate job creation and to increase the availability of growth capital for small and expanding businesses located within the State of Texas. The CAPCO program is not a grant program. A CAPCO can however, provide investment funds as an alternative to traditional bank financing for a business if it qualifies by meeting certain criteria under the statutory guidelines.
The CAPCO program supports economic development and generates tax revenues for the state through business growth and job creation. The CAPCO program is funded through the issuance of certified capital notes or “qualified debt instruments” to insurance companies. In return for their investments, participating insurance companies receive premium tax credits equal to 100 percent of the amount of their investment, interest income and in some cases an opportunity to participate in the profits of a CAPCO. Only those insurers that are required to pay a premium tax on insurance policies issued in Texas are eligible to purchase a qualified debt instrument.
By law, the Comptroller is required to prepare and file a biennial report with the governor, the lieutenant governor and the speaker of the house of representatives, concerning the results of the CAPCO Program.
The Comptroller’s office and the Texas Treasury Safekeeping Trust Company are responsible for administering the $400 million CAPCO program. CAPCO, funded by insurance premium tax credits, supports economic development and generates tax revenues for the state through business growth and job creation.
To date, the Texas Legislature has authorized two CAPCO programs, in 2005 and 2007. The 2007 legislation allowed an additional $200 million in investment credits and added low-income community businesses as an investment option for CAPCOs in Programs One and Two.
Since the program’s inception, the Comptroller’s office has approved 10 venture capital companies as CAPCOs under Program One and nine venture capital companies as CAPCOs under Program Two. (Many CAPCOs in Program One also have a fund in Program Two.)Note: The CAPCO program is not currently accepting new applications.