Newspaper article St Louis Post-Dispatch (MO)

Missouri Innovation Fund Would Be Big, Bold Bet on Entrepreneurs

Newspaper article St Louis Post-Dispatch (MO)

Missouri Innovation Fund Would Be Big, Bold Bet on Entrepreneurs

Article excerpt

Gov. Eric Greitens wants Missouri to support entrepreneurs on a much larger scale than it ever has, but he doesn't want bureaucrats picking winners and losers.

His solution is something he's calling a Missouri innovation fund, which would be launched with borrowed money and turned over to private fund managers. The money would flow through Missouri Technology Corp., which had been making investments in early-stage companies until its budget was slashed this year.

Greitens mentioned the innovation fund Thursday at an economic development conference in St. Louis, during which he also laid out other initiatives for improving the state's economy.

Drew Erdmann, the governor's chief operating officer, refers to the innovation fund as "MTC version 2.0." If the Legislature agrees to issue bonds, and make debt payments at the same level it was funding MTC in the past, he says the state could create a fund of more than $100 million.

Fund managers could raise additional money from private investors. The fund would have to invest in companies with a Missouri presence, but apart from that restriction the managers could invest wherever they saw the biggest potential return.

That would have some advantages over the way MTC has operated. The investment dollars would be committed for a long period, such as 10 years, and wouldn't be subject to the whims of legislative appropriations. A private manager also could be more nimble in responding to deals.

The proposed structure could create problems too, people involved in St. Louis' startup ecosystem say.

One of those is regional rivalries. A similar initiative in Ohio, called Third Frontier, solved this problem by allocating funds to separate managers in Cleveland, Cincinnati and other areas.

Another issue is that a large, profit-driven fund is likely to gravitate toward later-stage companies, those that have already created and tested their product or service and need money to expand. …

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