Planting the seed corn is an important step
For decades, state government’s economic development efforts in West Virginia have concentrated on public money, often investing in projects that had less than solid business plans.
Was a payphone company really a good idea at the dawn of the cellphone revolution?
On Wednesday, the state took a step toward a better plan as Gov. Earl Ray Tomblin announced the formation of an Angel Fund, in which private investors pool their money together to help new and expanding businesses. These investors will provide the seed corn that will provide the next crop in commerce.
Other states have had good results with similar funds.
At its website, the Angel Fund outlines the four things investors seek:
- Companies should have products/services with clear and strong intellectual property protection (patent protection) of specific features that competitors do not have and cannot copy easily.
- Companies are entering a competitive environment where existing products/services do not solve significant problems that buyers want solved — for instance, the cost of existing products may be considered prohibitive for many buyers.
- Companies have products/services that clearly solve one or more of the problems buyers have with existing products/services.
- The market the company is pursuing is clearly identifiable, the competitive landscape is not dominated by a few very large entrenched companies, the company has a management team in place, the company will not use the Angel investment to pay down debt and the company is realistic about the amount of ownership they are willing to give up.
This is an excellent development that is long overdue.
The government’s role in economic development is limited to providing infrastructure: schools, highways and airports, for example.
Indeed, the best thing the state can do is rein in the excesses of its own such as over-licensing, unnecessary regulations and a civil justice system that is hostile to businesses.
But helping accommodate private investment in companies that are here or are starting up definitely is a role that Gov. Tomblin should embrace, and has.
— Charleston Daily Mail, W.Va. (MCT)