FAQ for IDEA Fund
MTC is currently accepting applications for all of our IDEA Fund Co-Investment Programs. Application can be accessed using this link: FY24 IDEA Fund Application
We highly recommend that applicants prepare their answers beforehand and then fill out the application form. Please note that we are unable to share the submitted application answers, so it is important to keep your worksheet as a record of your application.
The IDEA Fund makes equity-based, co-investments in high growth technology based companies with the potential to make an economic impact within Missouri. As a state sponsored venture firm, MTC makes direct investments into companies in exchange for equity.
- MTC invests in scalable, high growth technology startups.
- Your company must be located in Missouri, or willing to relocate to Missouri.
- Your company’s technology must fall into at least one of MTC’s seven focus areas – Biomedical & Life Sciences, Healthcare Technology & Services, Financial Technology & Services, Software & Data, Energy, Manufacturing, Supply Chain & Logistics.
MTC typically considers that a company has met the Missouri-based company requirement if they can confirm the following:
- The company is registered to do business in the State of Missouri.
- The corporate headquarters are in Missouri, and the company publicly purports to be a Missouri-based company.
- The company has an active commercial lease for a Missouri-based office that corresponds with the Corporate Headquarters address.
- The founders and co-founders are Missouri residents.
MTC will determine if a company meets the organization’s required economic development impact on the State of Missouri on a case-by-case basis. The company will be required to provide a statement of current and future economic development for review by MTC’s Investment Committee or Executive Committee.
The IDEA Fund is open to all industries, but MTC primarily focuses on specific sectors that align with economic development strategies in various regions across Missouri.
- Biomedical & Life Sciences
- Healthcare Technology & Services
- Financial Technology & Services
- Software & Data
- Supply Chain & Logistics
MTC has three active programs within the IDEA Fund. Each program is intended to correlate to a different stage of the startup life cycle. It is suggested you reach out to MTC to discuss where you may best fit.
- TechLaunch Program – This is MTC’s pre-seed funding program. There are many indicators of a company’s place on the startup life cycle spectrum, but this program was developed for companies that have raised less than $250k of outside capital and are currently raising between $500k to $1M.
- Seed Capital Program – The Seed Capital Program was designed for companies who have spent substantial time in research and development or refining their product and identifying early ‘adopter customers’. The program targets companies that have raised approximately $500k to $2M of outside capital and are currently raising between $1M to $5M. Ideally, the seed capital provided by MTC will be leveraged to develop the company and product to the point venture capital groups will invest.
- Venture Capital Program – The Venture Capital Program was designed to accelerate private venture capital investment in Missouri-based start-up companies and to increase the overall investment impact of third-party investments. The program targets companies that are currently raising between $5M to $20M, and have identified a potential lead investor. The capital provided by MTC will be leveraged to attract additional venture capital funds to participate in the round, and accelerate the growth of the company.
These highly competitive application-based programs are subject to a thorough 9-step investment review process that reflects MTC’s core values of integrity, transparency, accountability, independence, and collaboration: MTC Investment Review Process
MTC typically invests under the same deal terms as negotiated by the co-investor(s), assuming an arms-length transaction reflecting market realities. Should the proposed terms be unreasonable MTC will invest under terms more in line with standard market rates.
MTC may require a security interest when investing through a convertible note.
MTC’s preference is to invest in companies where its investment represents 10-25% of the new capital being invested.
MTC typically invests in convertible notes and equity instruments. While MTC usually relies on the company’s investment documents, there may be instances where additional protections or a security interest are required when investing through a convertible note.
MTC requires a co-investment to ensure that the state and federal funding will be invested in the most attractive Missouri-based early-stage investment opportunities.
For each dollar that MTC invests, companies must secure one dollar of investment from private sources to match MTC’s investment.
Companies may use multiple investments from qualified co-investors to comprise the co-investment match to MTC’s investment, but investments made prior to the MTC award typically do not qualify as co-investments.
MTC prefers to close MTC’s investment simultaneously with all matching investors. However, in limited circumstances where an applicant can demonstrate significant burdens to such simultaneous closing, MTC is willing to consider alternative matching fund closing scenarios.
Traditionally, IDEA Fund co-Investors are individual angel investors, angel investor networks, and venture capital funds.
MTC expects Co-Investors to provide more than providing financial support; each Co-Investor is expected to be actively involved in the company’s operations either directly or in an advisory capacity. The level of active involvement varies depending on the size of MTC’s investment, the stage of development of the company and the oversight and voting rights MTC is entitled to as a result of its investment.
Applicants must provide information about their proposed co-investor. MTC will assess this information on a case-by-case basis to determine if the co-investment and involvement with the company meet the criteria for eligible matching funds.
Matching funds eligibility does not include investments from accelerators/incubators, crowdfunding platforms, AngelList syndicates, grant funding, in-kind investments, investments made in exchange for services, and sweat equity.
A lead investor plays a critical role in the funding round by investing a significant amount and possessing expertise in the applicant’s industry. They act as a liaison between the company and other investors, collaborating with the company to establish the terms of the funding round and assisting in determining its pre-money valuation. Additionally, the lead investor brings their knowledge and expertise to ensure the successful closure of the round.
MTC strongly favors venture funds as lead investors, although individual investors or family offices may be considered on a case-by-case basis. MTC has sole discretion in determining who meets our requirements as a lead investor.
MTC aims to make impactful investments that catalyze additional investment into Missouri based companies. MTC prefers to allocate investment before funding rounds are fully committed and/or completed.
MTC advises TechLaunch and Seed Capital applicants to apply once they have initiated discussions with investors and have a clear understanding of the scope of their funding round and the parties involved.
For Venture Capital Applicants, MTC requires* companies to have identified a potential lead investor who is willing to provide third-party investment. Additionally, MTC prefers not to be the final contributor to the funding round.
*MTC Portfolio companies may apply to the Venture Capital program prior to having a lead investor identified if they have 25% of the round soft circled and are in good standing with MTC data collection.
The application process typically takes 3 months from the application deadline to the awards. Once an award is made and the company secures the required matching investment and fulfills any contingencies outlined in the award letter, MTC will start the 90 day due diligence process.
MTC recommends that companies should apply for funding when they have already initiated discussions with investors. This allows the company to align the timing of their 1:1 matching fund investment with MTC’s investment.
Companies have up to 12 months from the award date to close their proposed funding round, which includes the co-investment and MTC’s investment.
No. Companies have the flexibility to apply to any of the three IDEA Fund programs, without being obligated to start with a specific one. To assist companies in making the most suitable choice, MTC suggests referring to the program guidelines regarding the current round size and fundraising history.
Throughout their entrepreneurial journey, companies have the opportunity to seek and secure investment from multiple IDEA Fund programs. However, it’s important to note that a company can only apply to one IDEA Fund program during a specific cycle. If the company is awarded investment, it must complete the investment process before being eligible to apply to another program.
Applications are accepted throughout the year and reviewed quarterly. Companies have the opportunity to apply for multiple cycles within a year. However, to ensure a competitive application, MTC advises companies to demonstrate measurable progress in product development, sales, and/or fundraising between each submission.