1. Short title
This Act may be cited as the “Incubator Network and Startup Success Act”.
Incubator Network and Startup Success Act
A BILL
To establish an incubator network and startup success program, and for other purposes.
2. Definitions
In this Act:
Startup incubator— The term startup incubator means a business or a nonprofit organization that—
provides resources and services designed to accelerate the growth and success of businesses, which may include—
physical workspace and facilities, including affordable or shared office space;
access to capital, business education, and counseling;
networking and mentorship opportunities;
access to advanced tools and other technology; and
other services intended to aid in developing a business; and
serves businesses, of which not less than 90 percent are startups.
Startup incubator network— The term startup incubator network means a group of startup incubators with an agreement to—
share resources among network members, which may include—
reciprocal facility privileges to an incubator member of a network member; and
common access to capital raising, business education, and networking programs;
share information and best practices among network members;
designate not less than 1 employee of a network member to be the official point of contact for the network members; and
establish a public website for the startup incubator network.
Category 1 startup incubator network— The term category 1 startup incubator network means a startup incubator network with a good faith estimate that not less than 50 percent of the incubator members of the startup incubator network have disadvantaged entrepreneur ownership.
Category 2 startup incubator network— The term category 2 startup incubator network means a startup incubator network with a good faith estimate that not less than 25 percent and less than 50 percent of the incubator members of the startup incubator network have disadvantaged entrepreneur ownership.
Category 3 startup incubator network— The term category 3 startup incubator network means a startup incubator network with a good faith estimate that less than 25 percent of the incubator members of the startup incubator network have disadvantaged entrepreneur ownership.
Director— The term Director means the Director of the Office of Innovation and Entrepreneurship of the Department of Commerce.
Disadvantaged entrepreneur— The term disadvantaged entrepreneur means an entrepreneur who is—
a socially disadvantaged individual or an economically disadvantaged individual, as those terms are described in paragraphs (5) and (6)(A) of section 8(a) of the Small Business Act (15 U.S.C. 637(a)(5), 637(a)(6)(A));
a woman;
a veteran, as defined in section 101 of title 38, United States Code; or
an individual with a disability, as defined in section 3 of the Americans with Disabilities Act of 1990 (42 U.S.C. 12102).
Disadvantaged entrepreneur ownership— The term disadvantaged entrepreneur ownership means—
in the case of—
a business, not less than 51 percent ownership by one or more disadvantaged entrepreneurs; or
a publicly owned business, not less than 51 percent ownership of the stock by one or more disadvantaged entrepreneurs; and
control of the management and daily operations of the business by one or more disadvantaged entrepreneurs.
Eligible entity— The term eligible entity—
means—
a category 1 startup incubator network;
a category 2 or category 3 startup incubator network that has submitted a formal plan under section 3(f)(2) or 3(f)(3), respectively; or
a planned startup incubator network that has submitted a formal plan to establish a startup incubator network under section 3(f)(1);
includes a startup incubator network that has received funding under—
the Small Business Act (15 U.S.C. 631 et seq.);
the Public Works and Economic Development Act of 1965 (42 U.S.C. 3121 et seq.); and
other Federal programs; and
does not include a startup incubator network that has received a grant under section 3(a) during the 3-year period ending on the date on which an application is submitted under section 3(g).
Incubator member— The term incubator member means a business that is served by a startup incubator.
Network member— The term network member means a startup incubator that is a part of a startup incubator network or planned startup incubator network.
Planned startup incubator network— The term planned startup incubator network means a startup incubator network that multiple startup incubators intend to create.
Rural area— The term rural area has the meaning given the term in section 343(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a)).
Startup— The term startup means a business that—
has less than $10,000,000 in annual gross receipts;
has not more than 5 years of gross receipts; and
has been an active trade or business for less than 10 years.
State— The term State means each of the several States, the District of Columbia, and any other territory or possession of the United States.
3. Incubator network and startup success program
In general— Not later than 1 year after the date of enactment of this Act, the Director shall establish in the Office of Innovation and Entrepreneurship of the Department of Commerce an incubator network and startup success program with the purpose of carrying out the grants described in subsection (b).
Grants authorized— The Director is authorized to award grants under this section on a competitive basis in the amount of $50,000 to each network member of an eligible entity selected based on the application submitted under subsection (g) and the criteria described in subsection (h).
Maximum amount— The total amount of grants made by the Director under subsection (b) in a fiscal year shall not exceed $2,000,000.
Matching requirement— The Director may not make a grant to the network members of an eligible entity under this section unless each network member demonstrates the ability to raise or plans to raise non-Federal contributions in an amount equal to the amount of Federal funds provided to each network member under the grant.
Announcement— The Director shall widely announce the incubator network and startup success program established under subsection (a), including on the website of the Office of Innovation and Entrepreneurship of the Department of Commerce.
Formal plans for preliminary eligibility— To be eligible to receive a grant under this section—
a planned startup incubator network shall submit to the Director a formal plan to form a startup incubator network within 1 year of the receipt of a grant under subsection (b) at such time, in such manner, and containing such information as the Director may require;
a category 2 startup incubator network shall submit to the Director at such time, in such manner, and containing such information as the Director may require—
a formal plan detailing planned efforts to increase access to the startup incubator network for businesses with disadvantaged entrepreneur ownership; and
evidence relating to the likelihood of the successful implementation of the plan described in subparagraph (A), including evidence of past success in increasing access to the startup incubator network for businesses with disadvantaged entrepreneur ownership; and
a category 3 startup incubator network shall submit to the Director at such time, in such manner, and containing such information as the Director may require—
a formal plan to increase the percentage of disadvantaged entrepreneur-owned incubator members by 5 percent within 5 years of the receipt of a grant under subsection (b); and
evidence relating to the likelihood of the successful implementation of the plan described in subparagraph (A), including evidence of past success in increasing access to the startup incubator network for businesses with disadvantaged entrepreneur ownership.
Application—
In general— Each eligible entity that desires the network members of the eligible entity to receive a grant under subsection (b) shall submit an application on behalf of the network members of the eligible entity to the Director, at such time, in such manner, and accompanied by such additional information as the Director may require.
Contents— Each application submitted pursuant to paragraph (1) shall include—
a report that—
specifies whether the eligible entity is a category 1, category 2, or category 3 startup incubator network; and
provides a good faith estimate of the percentage of incubator members of the eligible entity with disadvantaged entrepreneur ownership;
the contact information of the official point of contact for the eligible entity to coordinate with the Director on behalf of network members; and
a plan that demonstrates that the receipt of a grant under subsection (b) would increase certain measures of success for the eligible entity, which may include an increase in—
access to startup incubator network activities in the geographical region of the startup incubator network;
access to startup incubator network activities in rural areas;
the variety of startup incubator network activities available to incubator members;
the number of businesses applying to become incubator members of network members;
the number of incubator members retained by network members; and
the number of incubator members that complete the incubation program of the network member, including the number of incubator members that exceed the criteria of a startup established under section 2.
Criteria— In making grants under this section, the Director shall evaluate eligible entities based upon—
the likelihood that the eligible entity will successfully implement the plan described in subsection (g)(2)(C);
in the case of a planned startup incubator network, a category 2 incubator network, or a category 3 incubator network, the likelihood that the eligible entity will successfully implement a plan described in subsection (f);
in the case of a category 2 incubator network or a category 3 incubator network, the evidence of past success submitted under subsection (f)(2)(B) or (f)(3)(B), respectively;
the likely economic impact of successfully implementing the plan described in subsection (g)(2)(C) or a plan described in subsection (f), including the potential for creating jobs;
the likelihood that the eligible entity will remain a startup incubator network following the receipt of an award; and
other competitive criteria that the Director may develop.
Use of funds—
In general— A network member receiving an award under subsection (b) shall use not less than 25 percent of the award and not less than 25 percent of the matching funds raised pursuant to subsection (d) to—
create a new startup incubator network; or
support and expand existing startup incubator network activities.
Category 3 startup incubator networks— In addition to the requirements for the use of funds under paragraph (1), a network member of a category 3 startup incubator network receiving an award under subsection (b) shall—
use not less than 5 percent of the award and not less than 5 percent of the matching funds raised pursuant to subsection (d) to implement the appropriate formal plan the category 3 startup incubator network submitted pursuant to subsection (f)(3); and
satisfy any additional requirements for the use of funds determined by the Director, which may include requirements that reflect demographic data for the area served by the category 3 startup incubator network.
4. Personnel to support startup incubator networks
Hiring authority of the Director— The Assistant Secretary of Commerce is authorized to hire 2 additional employees in the Office of Innovation and Entrepreneurship of the Department of Commerce, who shall be charged with duties, which may include—
administering the incubator network and startup success program established under section 3(a);
facilitating existing and new startup incubator network activities;
facilitating the planning and formation of new startup incubator networks;
facilitating—
the development and implementation of plans of startup incubator networks to increase services to businesses with disadvantaged entrepreneur ownership; and
the design of inclusive programming; and
coordinating with the State designees described in subsection (c).
State assignments— The Director shall assign to not less than one of the additional employees hired under subsection (a) a list of States in which the employee shall take primary responsibility for startup incubator network activities, so that each of the States has 1 employee assigned to the State.
State designees— The governor of a State may designate an employee of an agency of the State that is responsible for economic development as the State designee to coordinate with the employee of the Office of Innovation and Entrepreneurship of the Department of Commerce assigned to the State under subsection (b).
5. Authorization of appropriations
There is authorized to be appropriated to carry out this Act $2,300,000 for fiscal year 2020 and each fiscal year thereafter.