Fund Structure
SBIC
Small Business Investment Company — an SBIC license allows VC funds to borrow government money (3:1 leverage) to invest in qualifying small businesses.
A Small Business Investment Company (SBIC) is a privately operated investment fund licensed by the U.S. Small Business Administration (SBA). SBIC licensees can borrow SBA funds at favorable rates — up to 3:1 leverage on private capital raised — to invest in qualifying small businesses. For a VC fund raising $30M in LP capital, an SBIC license could unlock an additional $60-90M in SBA debentures, effectively tripling investment capacity. SBIC-eligible investments must meet size standards (generally under 500 employees and $5M+ EBIT for standard eligibility). SBIC loans carry regulatory compliance burdens, but the leverage makes them highly attractive for emerging managers. Many established funds use separate SBIC-licensed vehicles alongside their main fund.