What do Ohio, North Carolina and Massachusetts have in common? They all have state-funded organizations that dole out millions of dollars in capital annually to promising startups.
It’s not so for Minnesota, though. But a St. Paul pipe fitter and state legislator wants to change that. State Rep. Tim Mahoney, DFL-St. Paul, wants the state Legislature to pour millions of dollars into a state Science and Technology Authority created last year.
Mahoney told the Minnesota House Taxes Committee on Thursday that he isn’t looking for a Mercedes or a Lexus when he’s asking that the authority receive up to $25 million a year for the next seven years. “I’m looking to get a Ford pick-up truck here for the state of Minnesota,” Mahoney told the committee.
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Almost all of the money would go toward providing grants of up to $250,000, as well as loans, to promising science- and tech-related startups. “Our position is eroded. Over the last decade, other states have made significant investments,” Rick King, chief technology officer at Thomson Reuters’ Eagan, Minnesota campus, told the committee. The full text of the bill is online. (A companion bill, S.F. 300, has been referred to the state Senate’s Jobs and Economic Growth Committee.
Some committee members voiced support for the bill. State Rep. Lyndon Carlson Sr., DFL-Crystal, said the bill guarantees that technology developed at the University of Minnesota and other institutions in the state is actually commercialized in the state, rather than being bought up by outside companies.
Mahoney, though, got some push back from other committee members who didn’t like the unusual funding mechanism the bill proposes. The idea is to guarantee that a portion of income taxes paid by Minnesota-based science and technology companies will go toward the fund for the next seven years, up to an amount of $25 million annually.
A guaranteed fund is needed for long-term consistency, Mahoney argued. State Rep. Ann Lenczewski, the lead Democrat on the committee, argued that legislators should be deciding on funding every year. She asked why they weren’t being “honest” about the funding, and didn’t just appropriate it or take out bonds. She wondered why startups simply couldn’t go to legislative committees to ask for money.
Mahoney responded: “I strongly believe that business people know better than pipe fitters, lawyers, citizen legislators about what is better for business.”
Peter Bianco, a local healthcare consultant who is leading efforts to build a Minnesota Science Park, watched the hearing over the Internet. He thought Lenczewski had a point, that Mahoney is trying to “engineer” around a culture in the state that is lukewarm about funding startups. He said Mahoney’s proposal is “too little, too late.”
It’s 27 years late when it comes to North Carolina. The state now provides $19 million annually to a North Carolina Biotechnology Center that provides loans and grants to biotechnology startups. North Carolina didn’t really have a biotechnology industry before the center started. Now it has 540 companies providing 58,000 jobs. Many of those companies either directly or indirectly benefited from the center.
Norris Tolson, the center’s president and CEO, credits the state with making a long-term investment. Through good times and bad, the state consistently gave more money each year to the center.
Tolson said he would be happy to give more advice to Mahoney or anyone else in Minnesota interested in starting the Science and Technology Authority. “But I won’t send any companies your way,” he joked.
The Science and Technology Authority’s 18-member advisory committee is estimating that Mahoney’s plan could create 30,000 to 45,000 direct science and technology jobs in Minnesota, and 100,000 indirect jobs, over the next 10 years. Click here to download the committee’s report.
