A program fulfilling its aim of boosting venture capital investment in Utah companies is on its way to getting a boost from the Legislature.

The Workforce Services and Community and Economic Development Interim Committee on Wednesday endorsed a draft bill that would increase the level of tax credits in the Utah Fund of Funds program. If the full Legislature agrees, the fund's oversight group, the Utah Capital Investment Board, would be able to issue $300 million in contingent tax credits, up from the original $100 million level.

While several speakers told the committee that the Fund of Funds has been extremely successful, the fund's managing director, Jeremy Neilson, said it could face a period of "hibernation" without the increased credit amount.

The fund program was launched last year after legislation in 2003. Backed by the tax credits, it is designed to provide access to alternative or nontraditional capital to Utah entrepreneurs. The program does not invest money into any company or individual but rather in venture capital and private equity funds that commit to establishing a working relationship with the Utah Fund of Funds and Utah's start-up and business community, and commit to making investments in qualifying companies. The Utah Fund of Funds invests in venture capital and private equity funds located in-state and out of state.

"It's not an appropriation bill," Neilson said of the draft legislation. "We're not requesting more cash. We're requesting that you expand the program." He later said the new credit level will "keep this program moving forward and keep the momentum alive."

Neilson and others hailed the young program's success. More than 160 funds have applied to participate and 15 funds have received money. Twenty-two Utah companies have received investments from those venture firms. They employ 974 people and have raised a total of $293 million, including the $50 million from the funds in the Utah program's portfolio.

By comparison, Oklahoma's program has been in place 12 years and 19 companies there have received investments, Neilson said.

Alexander L. Searl, chairman of the Utah Capital Investment Board, said Utah is not in jeopardy of cashing the tax credits, the fund program is helping the state's economy and it should be expanded.

"It's performing according to the plan initially put together," Searl said.

Sen. Scott Jenkins, R-Plain City, said the fund was started when the state's economy was in trouble, with corporate headquarters leaving the state and Utah being home to only one venture capital company. Looking for ways to "pump money and enthusiasm" into the economy, lawmakers took the business community's suggestion for the Fund of Funds.

"It's been quite a surprise," Jenkins said, adding that one reason for its success is that Brigham Young University and University of Utah graduates who left the state have "come home to do a little business."

But Rep. Jim Dunnigan, R-Taylorsville, worried about the program putting Utah at risk. Neilson acknowledged that risk exists, but it is mitigated by the diversified portfolio that the Fund of Funds has compiled.

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