Key among the recommendations of a new report to promote innovation in the state is the creation of a fund to support emerging technology companies.
Missouri Gov. Eric Greitens (Missouri Task Force)
Missouri Gov. Eric Greitens is considering the creation of a fund that would offer entrepreneurs millions of investment dollars after a report found the state had greater potential to develop its capacity for innovation and entrepreneurship.
The report, a product of the Governor’s Innovation Task Force, was released last week and concluded that the state had consistently ranked in the mid-tier nationally for innovation, a term it defined through a measurement of productivity, tech company density, patents, research and development, and the number of state jobs in science, technology, engineering and mathematics (STEM). The task force recommended 33 ideas to promote innovation, including one to create the Missouri Innovation Fund.
The Governor’s office called out the suggested investment fund in a press call on Wednesday in which Missouri Chief Operating Officer Drew Erdmann and Acting Director of Economic Development Rob Dixon said it was one of the top recommendations to come out of the task force.
“It’s the idea of taking the legal structure you currently see, and approaching funding in a different way, potentially working with the legislative branch to get long-term bonds in play that would allow the state to put in place a long-term investment fund that also would be open to large and small private investors.” Erdmann said.
Erdman said that the state is meeting with legislators and other stakeholders to establish the fund. In the task force’s report, the group of private and public members said such a fund could stimulate economic development in a sustainable way. The state would receive a percentage of the carried interest revenue from loans to entrepreneurs, which could then be reinvested back into the fund.
“That would allow [the fund] to scale up to something on the order of tens of millions, or hundreds of millions of dollars to invest in Missouri startups and innovators,” Erdmann said.
Outside of direct funding, the group also said that the fund might be opened up to private investors and even to investment from state pension funds and other state institutions. The group said successful examples of similar funds include the Wisconsin Alumni Research Foundation, which has generated more than $8 billion through its venture investments, and the Ohio Capital Fund, which has generated more than $1 billion for venture investment.
The task force noted only a few downsides to the recommendation, such as a potential risk of passing over smaller stage startups in favor or more developed companies that might generate higher returns for investors. The group also said the state would need professional help to ensure its tech startup investments were successful since it had no previous experience managing such an enterprise.
Apart the fund, other recommendations include the creation of a Missouri Rural Broadband Office to connect more state residents to online education and jobs, and to consider adjusting the state’s tax policy to give private investors a tax credit for investing in state businesses or provide tech startups tax credits to ease the financial burdens of starting a new company.
Dixon said these suggestions are all still under review. Many of the recommendations may not require new resources, he added, and can be redirected through partnerships with universities, nonprofits and the private sector.
“The basic essence of our approach today is that if you’re going to do different, if you’re going to achieve this bold vision, we have to take a look at the way we're doing things and attempt them in a different way,” Dixon said. “That’s what this is about and these are the ideas were talking about now.”