Saturday, November 19, 2011

COUNTERPOINT: Maryland IS Launching New Programs to Encourage Startups and Innovation

Lately, Maryland Juice has been throwing the evil eye at the use of corporate welfare dollars in ways that don't seem to create new jobs or economic activity. To be clear, we are not anti-business, but we are anti-waste and very pro-efficiency. This is a recession, after all. That's why we've suggested a number of alternative ways to spend that kind of money, including by focusing on sectors that are more likely to lead to immediate new jobs and spending (ie: small or local businesses & startups). The point is simple: we should at least consider using the money for more productive things than paying off companies that are threatening to move. When a company makes that threat, their game plan is often already decided. You can't negotiate when faced with economic extortion.

We recently posted a series of articles on these topics, most recently highlighting an alternative energy company that moved from Montgomery County to Howard. The piece (which included a list of things governments can do to encourage startups) elicited responses from a couple elected officials, including this public comment from Del. Eric Luedtke (D14 Democrat):
DBED Head: Christian Johansson
Reading all the discussion on economic development with interest, but it's worth noting that the state is already doing a number of things on Tim's list of suggestions. For example, the Department of Business and Economic Development proposed (and the Assembly passed) the Invest Maryland Initiative this past spring. It totals $70 million of investment funds which are intended to largely focus on the angel stage of investment, and the majority of which will be privately managed by an experienced investment firm. Invest is intended to be an evergreen fund, so that capital and potentially some portion of profits returned from successful start-ups will be reinvested in other start-ups. The Secretary at DBED - Christian Johansson - is very focused on creating a better environment for entrepreneurship in the state, and Invest was his big push this past session:

Here is a little more information about InvestMaryland:
Under the watchful guidance of the Maryland Venture Fund Authority (MVFA) and the Department of Business & Economic Development (DBED), insurance companies will bid between $0.70-$1.00 on each dollar of credit in the fund. Proceeds will be split, with 67% of proceeds going to private venture firms and 33% going to the Maryland Venture Fund. Funds will be used to help finance traditional stage businesses in industries including life sciences, information technology and clean energy....

Funds generated though InvestMaryland will be available to qualified Maryland businesses after June 1, 2012 through the Maryland Venture Fund and selected private venture firms. In order to apply for funding, a qualified business must meet the following criteria:
  • Principal business operations located in Maryland and remain here after receiving an investment
  • Fewer than 250 employees
  • Use the funds to support existing operations or establish and support new businesses
Maryland Juice is not all gloom and doom, so we decided to check out DBED's web presence, since this would be a good entry point for a business looking for assistance from Maryland. Notably, their featured video right now speaks to a question we have recently discussed on this blog: what do we do about the looming bubble-burst in defense spending? The video contains an interview of a defense contractor discussing the non-defense applications for his company's work. His comments also include the following note about Maryland:
Maryland overall is representative of the kind of location that has a really deep and rich talent pool. Beyond having just a current talent pool, it is clear through initiatives that the Maryland government is undertaking ... that there's a future path for more kids coming out of school who are gonna have fundamental training and the kinds of skill sets that are going to be important to serve this industry in the long haul.

The DBED website does indeed have a number of useful resources, so I encourage the curious to check it out:

So all that looks great. But I would still note that if Maryland is going to be serious about fiscal austerity and holding the line on revenues and spending, it only seems fair to ask for consistency from conservatives and business representatives. They have been very vocal in arguing that we cannot afford government workers and social programs, but they have also been arguing for additional corporate and upper-bracket tax welfare, including new tax cuts. All this after we already allowed the millionaire's tax to sunset. Meanwhile, it should be obvious that the responsible thing to do is to cage our revenue streams. At a minimum, it also seems fair to ask that money spent on new corporate welfare be given as much scrutiny from policymakers as government employees' contracts are currently receiving. Don't you think our corporate welfare needs to be shovel-ready or otherwise prove that it is a good investment?

P.S. Can someone tap Maryland's business leaders on the shoulder and ask them to stop generating unrepresentative news articles about the State's business climate?

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