Leaf fund eyes biotech

By Todd Cohen

Rocky Mount, N.C. – The Golden Leaf Foundation is launching an $85.4 million package of initiatives it says will stimulate at least $350 million in new investment in North Carolina, generate 25,000 jobs and make the state a leader in the biosciences industry.

The package includes $42 million the foundation will invest in venture debt and venture capital funds that will invest in biopharmaceutical firms developing or making their products in the state.

If those investments succeed, the foundation says, it plans to invest $108 million more over the next six years.

“The board considered the whole resource of Golden Leaf and saw the potential to use investments and economic advancement strategy just as we are using grants as an economic advancement strategy,” says Valeria Lee, the foundation’s president.

The foundation, which will get half the $4.6 billion coming to North Carolina through the settlement among 46 states and the tobacco industry, says it will take the unusual step of dipping into its principal to make $18.4 million in direct grants that will be part of the stimulus package.

Foundations typically try to make grants from income generated by the investment of their endowment principal, which they try to preserve so it can grow and generate future income.

Lee says the board took the “extraordinary measure” of dipping into endowment in the face of the need to revive the state’s rural areas in a slumping economy.

The foundation, which has received $252 million from the tobacco settlement and now has assets of $235 million, has been investing in the financial markets for more than a year, Lee says, and simply decided to redirect some of its dollars in investments designed to generate jobs and new business for North Carolina.

Other initiatives in the package include:

* $10 million to be invested in a biodiesel plan that will use soybeans to produce alternative fuels.

* $10 million for jobs training, mainly through the state community college system but also including state universities and other groups.

* $3.4 million for the N.C. Rural Economic Development Center to create a loan-loss reserve for the center’s second loan program to spur lenders to extend credit to small business in rural areas. The center’s first loan program helped close more than $31 million in loans.

* $5 million to help local governments and regional economic development partnerships finance the certification of industrial sites for development.

* $15 million in annual grants to be made in November based on 346 grant proposals submitted to the foundation by its Aug. 1 deadline.

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