Venture Capital Programs: Conflict-of-Interest Standards
The following is extracted from: Section VIII.f, Pages 27-29, U.S. Department of the Treasury State Small Business Credit Initiative Capital Program Policy Guidelines, dated November 10, 2021.
Funds from an SSBCI venture capital program must not be used to make an investment in a business in which an SSBCI insider has a personal financial interest. States with venture capital programs should adopt conflict-of-interest policies consistent with the standards set forth in this section.
The following definitions apply to the conflict-of-interest standards for venture capital programs:
An “SSBCI insider” of an SSBCI venture capital program is a person who, in the 12-month period preceding the date on which SSBCI support for a specific investment in a venture capital fund or company is closed or completed:
Was:
a manager or staff member, whether by employment or contract, in the state’s SSBCI venture capital program;
a government official with direct oversight or jurisdiction over an SSBCI venture capital program, or such an official’s immediate supervisor;
a member of the board of directors or similar body for a state-sponsored non-profit entity who, through such membership, has authority to vote on decisions to invest SSBCI funds or has authority over the employment or compensation of staff managing processes related to the investment of SSBCI funds;
a member of the board of directors or similar body for an independent non-profit or for-profit entity that operates an SSBCI venture capital program; or
an employee, volunteer, or contractor on an investment committee or similar body that recommends or approves SSBCI investments under the SSBCI venture capital program; or
Exercised a controlling influence on state decisions regarding:
The allocation of SSBCI funds among approved state venture capital programs;
Eligibility criteria for the state’s SSBCI venture capital programs; or
The processes for approving investments of SSBCI funds under the state’s SSBCI venture capital program.
A “business partner” of an SSBCI insider is a person who owns 10 percent or more of any class of equity interest, on a fully diluted basis, in any private entity in which an Conflict of Interest Standards Rev 033123 SSBCI insider also owns 10 percent or more of any class of equity interest on a fully diluted basis.
A “family member” of an SSBCI insider means:
Such person’s spouse, domestic partner, parents, grandparents, children, grandchildren, brothers, sisters, stepbrothers, and stepsisters; and
Any other relatives who live in the same household as the SSBCI insider.
An “independent non-profit entity” means any non-profit entity that is not state-sponsored.
A “personal financial interest” means any financial interest derived from ownership or right to ownership of, or lending to or other investment in, a private, for-profit entity that may receive an SSBCI investment (including any financial interest derived from ownership or right to ownership of, or investment in, a venture capital fund).
A “state-sponsored non-profit entity” is a non-profit entity created by state legislation to pursue policies of the state government and over which state officials exercise a controlling influence through budgetary decisions or other legislative action or direction. Subject to the exceptions described below, SSBCI funds may not be used by SSBCI venture capital programs to make or support investments in a company or venture capital fund if an SSBCI insider, or a family member or business partner of an SSBCI insider, has a personal financial interest in the company or venture capital fund. A prohibited conflict of interest is deemed to exist even if the conflict is disclosed or the relevant individuals recuse themselves from participating in the investment. Further, accepting a role as an SSBCI insider does not require a person to divest financial interests in a company or venture capital fund resulting from previous employment or personal investment activity. However, if a person is an SSBCI insider, any company or venture capital fund in which the insider has a personal financial interest is prohibited from receiving investments or financial support from SSBCI funds.
Exceptions to the general prohibition are as follows:
A governmental entity or a state-sponsored non-profit entity may use SSBCI funds for follow-on investments in companies or venture capital funds if the entity has an existing ownership or voting interest resulting from a prior investment of SSBCI funds or non-SSBCI funds. Furthermore, in this circumstance, the entity may authorize investments if an SSBCI insider serves on the board of directors of the company or venture capital fund, if an SSBCI insider does not have a personal financial interest in the company or venture capital fund and the entity’s prior financial interest is in compliance with all applicable state laws and rules.
An independent non-profit or for-profit entity managing or investing SSBCI funds for an SSBCI venture capital program is not precluded from authorizing follow-on investments using SSBCI funds in a company or venture capital fund in which the entity previously invested SSBCI funds or the entity has previously appointed a representative to serve on the board of directors in stewardship of the investment. However, such independent non-profit or for-profit entity may not authorize (or seek approval from the participating state for) an investment of SSBCI funds in a company or venture capital fund in which the entity holds any type of financial interest resulting from an investment made with non-SSBCI funds.
List of State-Related SSBCI Insiders
As of 3/23/24
HTDC Staff Members
Name
Insider Status: Expiration Date
Wayne Inouye, Acting Executive Director
Current
Vacant, Program Manager
N/A
Ray Gomez, CFO
Current
Members of the HTDC Evaluation Committee
Name
Insider Status: Expiration Date
Gregory Barbour
Current
Georja Skinner
Current
Gwen Yamamoto Lau
Current
HTDC Board Members
Name
Insider Status: Expiration Date
Craig Nakanishi, Chair
Current
Vassilis Syrmos, Vice Chair
Current
Edward Barnabas
Current
Sandra Fujiyama
Current
Matthew Sullivan
Current
Gregory R. Kim
Current
Vincent Kimura
Current
James Kunane Tokioka
Current
Dane Wicker
Current
Rick Volner Jr.
Current
HTDC Contracted Consultants
Name
Insider Status: Expiration Date
Iqbal Ashraf
Current
Vijoy Chattergy
Current
Conflict of Interest Standards Rev 033123 State Officials Who Exercise a Controlling Influence on Decisions Regarding the Allocation of SSBCI Funds
Name
Insider Status: Expiration Date
Josh Green, Governor of the State of Hawai‘i
Current
Luis Salaveria, Director, Dept of Budget & Finance
Current
David Ige, Former Governor of the State of Hawai‘i
November 30, 2023
Craig Hirai, Former Director, Dept of Budget & Finance
