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A New York State of Mind: In-State Private Equity Program Invests in New York Start-Ups

Originally founded by the State of New York Comptroller’s office in 1999, New York’s In-State Private Equity Program has certainly made an impact on the state’s best and brightest new businesses.1 Since its creation, the program has intended to support native New York businesses while also generating hopefully solid returns for the state.2 Historically, and documented in recent years, the program has surpassed this modest expectation, yielding an internal rate of return of nearly 30 percent.3.

Pulling funds from the state’s massive $160 billion pension fund, the program has invested nearly $700 million into start-up companies and private equity firms over the past decade.4 It’s backed today by the current state of New York comptroller, Thomas DiNapoli, who has been doing his part for the cause since taking office in 2004.5 DiNapoli recently said that the program will receive an additional $400 million from the state’s pension fund in coming years, with the intention of investing in New York companies with particular potential for job creation and growth.6 And with what has proved to be generous returns yielded on the investments, he doesn’t plan to stop at the nearly $1.1 billion dollar marker.  “The In-State Private Equity Program has proven to be a win for the state’s economy and for the state pension fund. For every dollar invested in exited companies, we’ve made $1.60.” DiNapoli said in a statement.7

The pension fund, one of the largest in the country, covers one million retirees and current public employees in state and local governments.8 The fund aims for a return of 7.5% yearly, and its performance largely impacts the amount that local governments are able to pay for retirement costs.9 While it has been increasingly difficult for New York officials to combat growing retirement expenses because of widespread economic hardship in recent years, the in-state program has made a name for itself as dependably successful, surpassing the 7.5% rate of return target by nearly 13% on investments that cashed out the equity they received from the state.10

But the program’s successes are greater than pure monetary gains. According to DiNapoli, the program has helped to create or maintain almost 4,000 jobs across the state.11 So today, DiNapoli focuses his efforts on locating those investments that will yield not only the greatest return, but also those that generate the largest number of employment opportunities for the state’s residents.12 In August, the comptroller’s office promoted its investments in two technology companies, RebelMouse and CoopKanics, as part of its initiative to invest in New York businesses.13 These investments are largely representative of DiNapoli’s investment targets in recent years, as the comptroller has focused his efforts on homegrown tech companies in conjunction with Mayor Michael Bloomberg’s “Made in N.Y.” initiative.14 Both recently announced deals were made on behalf of the fund by SoftBank Capital, one of the investment firms managing state money as part of the comptroller’s program.15 And it seems that investments are being kept in the family, as both RebelMouse and CoopKanics have connections to previous investments by DiNapoli.16

Despite the tremendous success of the program however, the comptroller’s office has received some criticism for not looking else where for out-of-state investments that might reap as significant or even better returns.17 But the loyalty of the program is an impressive and to-be-admired trait, and DiNapoli doesn’t seem to be considering looking anywhere but his own back yard for the next big business venture. He demonstrates this unwavering fidelity to New York start-ups with the office of the comptroller’s mission statement that’s frequently repeated by DiNapoli himself: “The program’s concept is a simple one: if you’re prepared to make a commitment to New York and can state a compelling case for our investment, we’ll make a commitment to you and your business.”18


  1. Business First, NYS Office of the Comptroller-NYS In-State Equity Investment Program, http://www.nyfirst.ny.gov/resourcecenter/AgencyPrograms/OSC/InStateEquity.html (last visited Sept. 27, 2013). 

  2. Michael J. De La Merced, New York State Comptroller to Promote Investments in Silicon Alley, DEALBOOK (Sept. 20, 2013), http://dealbook.nytimes.com/2013/08/20/new-york-state-comptroller-to-promote-investments-in-silicon-alley/?_r=0

  3. Id. 

  4. Joseph Spector, Comptroller Touts New York Pension’s Private Equity Fund, LOHUD.COM (Sept. 17, 2013), http://www.lohud.com/article/20130917/NEWS/309170049/Comptroller-touts-New-York-pension-s-private-equity-fund

  5. Id. 

  6. Id. 

  7. Id. 

  8. Id. 

  9. Id. 

  10. Id. 

  11. Id. 

  12. Office of the State Comptroller, http://www.osc.state.ny.us/pension/instate/ (last visited Sept. 27, 2013). 

  13. Michael J. De La Merced, New York State Comptroller to Promote Investments in Silicon Alley, DEALBOOK (Sept. 20, 2013), http://dealbook.nytimes.com/2013/08/20/new-york-state-comptroller-to-promote-investments-in-silicon-alley/?_r=0

  14. Id. 

  15. Id. 

  16. Id. 

  17. Joseph Spector, Comptroller Touts New York Pension’s Private Equity Fund, LOHUD.COM (Sept. 17, 2013), http://www.lohud.com/article/20130917/NEWS/309170049/Comptroller-touts-New-York-pension-s-private-equity-fund

  18. Office of the State Comptroller, http://www.osc.state.ny.us/pension/instate/ (last visited Sept. 27, 2013). 

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