Economically Speaking: State moving to boost seed capital for business

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Just as a plant requires sunlight as an energy source for it to grow and prosper, entrepreneurs must have access to sources of seed capital to grow their ideas and new businesses here in the state of Missouri.|ret||ret||tab|

As new technologies rapidly evolve in Missouri and elsewhere, these advances are leading to the development of new products and an increase in the number of new start-up businesses. |ret||ret||tab|

However, as new businesses try to become prosperous, an outside source of funding may be required in the form of seed or venture capital. |ret||ret||tab|

Not long ago there was virtually no seed capital flowing in Missouri. |ret||ret||tab|

But partially as a result of some recent policy initiatives, the state now ranks 16th nationally in terms of venture capital growth and eighth in terms of total employment in fast-growth companies, according to the Washington, D.C.-based Progressive Policy Institute.|ret||ret||tab|

With the support of organizations such as the St. Louis RCGA and its Technology Gateway Alliance, and the Kansas City Area Development Council, the Department of Economic Development has focused its efforts toward bringing greater venture and seed capital to Missouri.|ret||ret||tab|

The result of our efforts was a realization by the Missouri General Assembly of the importance of having a reliable source of seed capital in order for entrepreneurs to grow their ideas and new businesses here in Missouri. |ret||ret||tab|

That realization led to the passage of one of the most significant pieces of economic development legislation of the decade, the New Enterprise Creation Act (NECA). |ret||ret||tab|

This act is just beginning to create a solid foundation, on which the development of technologies in Missouri can grow and prosper. |ret||ret||tab|

One of the cornerstones of that foundation is the issuance of $20 million in state tax credits to attract at least $20 million in funding for early-stage, technology-based enterprises in the state. |ret||ret||tab|

The NECA also authorized the formation of a 13-member Missouri Seed Capital Investment Board to monitor the activities of the state's seed capital program. At its first meeting, held recently in St. Louis, the board chose as its first chairperson Dr. Thomas R. Sharpe, executive director, of the University of Missouri-Columbia's Office of Technology and Special Projects. The board also granted preliminary approval for Prolog Ventures, a St. Louis-based firm, to manage the new program.|ret||ret||tab|

Through the combined efforts of many, Missouri is beginning to see the influx of seed and venture capital funds. |ret||ret||tab|

Some of the funds are leveraged by state tax credits, such as the NECA fund, the CAPCO Program and Capital Tax Credit Program, but several other completely private funds have also been formed. |ret||ret||tab|

In 1997, Missouri ranked 17th in the nation in the amount of venture capital investments, with $154 million invested in companies here during that period of time.|ret||ret||tab|

Just two years later, nearly the same amount invested during the entire year of 1997 was invested in the second quarter of 1999 alone ($138 million). Missouri ended 1999 with a 117 percent increase in early-stage funding, putting it in the category of one of the fastest growth rates in the nation. |ret||ret||tab|

We are interested in more progress in making early-stage money available to Missouri entrepreneurs. |ret||ret||tab|

The degree to which we are successful could be the key to more high-tech, high-wage jobs for the future and new tax revenues to support our local and state institutions, such as education. |ret||ret||tab|

(Joseph Driskill is the executive director for the Missouri Department of Economic Development.)[[In-content Ad]]