Grand Forks Growth Fund Loans Drone Startup And May Become Co-Owner



On Monday, July 12, committee members re-elected City Councilor Bret Weber and Local Entrepreneur Jonathan Holt as Chair and Vice Chair, respectively, of the Growth Fund. After that, the committee worked out the details of how the Office of Workplace Development can convert a startup loan for technology companies into a block of shares if the company proves to be successful. The committee then entered into such an agreement. with First-i drone company.

According to Keith Lund, president and CEO of the Grand Forks Regional Economic Development Corporation, the question of how the Growth Fund can get a better return on some of its investments has been in the minds of city and economic officials for some time. Lund spoke at the Growth Fund meeting on Monday.

The idea was conceived and then discussed to include the possibility of changing the loan given to a technology startup – through the Fast Track Program – to a share of equity equal to the amount of the loan. The JDA approved the proposal at its meeting last Tuesday, and some outstanding issues were clarified at its Growth Fund meeting on Monday.

“The question was asked: is there a way to increase the financial capacity of the Growth Fund?” Lund said.

This question can be answered by converting the loan into a shareholding of a company with high growth potential. Under the new policy change, Accelerate’s loans may include so-called “convertible bonds,” meaning JDA has the option to buy at a discount the shares of the company to which it lent the capital.

However, this does not mean that JDA will buy shares right and left. Accelerated loans may or may not include convertible bills of exchange, and some may remain on their usual terms: a maximum of $ 250,000 with no payments or interest for three years, then two years at 2% per annum, also no payments, followed by a balloon at expiration five years.

On Monday, committee members agreed that an acquisition of a 10% stake in the company should be sufficient if this option is chosen, and that government funding qualifies as a necessary eligibility in the program. Accelerate loans require a dollar-to-dollar ratio of “private or institutional investment”.

The committee has taken steps to address potential conflicts of interest if the city does business with a company in which JDA owns a stake. If such a company responds to the city’s request for proposal, a third party will likely be called in to weigh the matter.

After the convertible banknote program was largely developed, the committee voted to grant the Accelerate loan to First-i, a drone and UAV data management company. The loan amount is $ 250,000, which will provide government funding in the amount of $ 850,000. If JDA converts this loan into equity, it will be able to buy shares at a 20% discount.

Also at Monday’s meeting, committee members voted to give Grand Forks City Attorney Dan Gaustad permission to authorize the public sale through a closed offer of JDA-owned corporate center II on downtown Demers Avenue. The building is estimated at $ 3 million. Gaustad said JDA is under no obligation to accept applications below that amount.

Corporate Center I needs some work before proceeding to participate in the auction, as some tenants have the right to buy out the space they are leasing.


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