Senate committee passes venture capital fund

Bloomington Mayor John Fernandez and Indianapolis Mayor Bart Peterson have long lobbied for a high-tech venture capital fund that would encourage more firms to locate in Indiana.\nTheir efforts in the General Assembly have finally borne fruit.\nThe Senate Energy and Economic Development Committee passed such legislation Tuesday 8-0. Sponsored by Sen. Vi Simpson, D-Ellettsville, the bill would establish a venture capital fund to create a pool of money for high tech ventures based in Indiana.\n"We're very excited it got passed," said Bloomington Deputy Mayor James McNamara. "We hope to keep it moving forward."\nAnd it's likely to move forward, said Democratic policy analyst Ryan Soultz.\n"It has the support of our caucus," he said. "And it has a lot of support among the Republican caucus as well. We didn't get a single dissent in the committee."\nThe legislation -- co-sponsored by Republican Sen. Steve Johnson of Kokomo -- would create a number of high tech jobs in the state, Simpson said.\n"The goal of the initiative is to provide start-up capital to Indiana entrepreneurs so they can take laboratory innovation and bring it to marketable goods and services while, at the same time, create new high-paying jobs," she said. "By passing this bill, Indiana would take a significant step toward making itself the Midwest's high-tech leader."\nFernandez testified in favor of the bill.\n"We know that if we don't create a more attractive environment for capital formation, many of the creative ideas that are currently being developed in our businesses will languish," he said. "Or more troubling -- those ideas will move to other competitors' states where the resources are available to take these ideas to the marketplace, creating new jobs and opportunities elsewhere."\nGiven Indiana's reputation of being technologically behind, Fernandez said the state should do everything in its power to be more business-friendly.\n"We can't afford to have that happen," he said. "There is a tremendous sense of urgency about these kinds of issues in our cities and towns all across Indiana." \nWhile the state coffers are dwindling, Simpson said it doesn't present a problem because of the bill's creative financing. Funding, she said, would come from leveraged tax cuts and private equity from public retirement coffers.\n"Thirty-seven other states already invest a portion of their pension money into venture funds," she said. "We know that venture capitalists tend to recommend projects close to home, and Indiana needs additional resources."\nSoultz, who helped craft the wording of the bill, said it was based on a successful model in Oklahoma. The state, he said, would put up a $1 for every $2 invested in a private high-tech firm.\nSupported by contingent tax credits from the state, the fund pays back the money with the return on its investment.\n"The fund in Oklahoma hasn't lost a dime," he said.\nMatching private funding weeds out firms without viable business strategies, Soultz said.\n"No one is just going to take a million dollars and walk away," he said. "We are running a high risk, of course. But with high tech, the returns are always high"