Newspaper article THE JOURNAL RECORD

Private Venture Capital Approach Will Aid State / Says Fox

Newspaper article THE JOURNAL RECORD

Private Venture Capital Approach Will Aid State / Says Fox

Article excerpt

Oklahoma is avoiding a lot of problems by favoring the private, instead of the public, approach to creating venture capita l, according to G. Douglas Fox, president and chairman of the board of Tribune/Swab-Fox Companies of Tulsa.

"Venture capital is strictly a private-sector activity," said Fox, who heads a corporate family that includes TSF Capital Corp., a venture capital firm.

Fox, who began campaigning for venture capital legislation in Oklahoma two years ago, saw a dream come true last week when Gov. George Nigh signed the bill giving a 20 percent tax credit to investors in private venture capital companies.

Although at least 22 states allow public pension funds to be invested in venture capital firms or state-managed venture capital pools, Fox said he believes that is the wrong approach.

There was great opposition in the Oklahoma Legislature last year every time the governor or Rep. Don McCorkell, D-Tulsa, proposed the use of public pension funds for venture capital.

By the end of 1985, only three states - Louisiana, Indiana and Maine - gave tax breaks to investors in private venture capital firms, according to Madeline Franchi, a senior associate with Venture Economics Inc., the consulting firm in Wellesley, Mass.

Oklahoma and Kansas have joined that flock.

"It's vastly better to give a tax break for private investors than to have a state-run pool," Fox said.

Like the Louisiana law, Oklahoma's tax credit will not be given for investments in firms involved in oil and gas exploration, real estate development or appreciation, or for a banking or lending operation. The Oklahoma law also bars tax credits for investments in retail sales of food or clothing, farming and ranching.

The type of person needed to run a venture capital firm is someone who usually can't be lured to work for state government, Fox said.

"He has to have, as his incentive, a part of the action," Fox said.

Timing is another critical factor, Fox said. …

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