An effort to help start-up businesses survive and thrive started under the Culver administration got rave reviews Monday from Gov. Terry Branstad and his economic development helpers.
Results of a study on the economic and fiscal impact of the state’s demonstration fund found the $8.7 million and technical assistance provided to 79 companies between 2007 and 2011 to encourage high technology prototype and concept development activities created 600 new jobs and generated $2.1 million in new tax revenue.
Chris Nelson, president and CEO of Kemin Industries and board member of the Iowa Innovation Corporation – which oversees the fund – said the return on the state’s investment averaged about 24 percent.
“I’ll take that any day,” Nelson told a Statehouse news conference discussing the study results. He said $13 million was awarded to 110 companies since the fund was initiated and 101 of those awardees are still in existence.
The Demonstration Fund supports commercialization activities by small and medium-sized Iowa companies in the advanced manufacturing, biosciences, and information technology industries, state officials said. The primary purpose of the fund is to help businesses with a high-growth potential reach a position where they are able to attract later stage private sector funding in hopes of achieving commercially viable products or services within a reasonable period of time.
Under the program, a business must be an Iowa-based company developing a unique and competitive product, technology, or process that can be protected in the marketplace and falls within the industries of advanced manufacturing, bioscience, or information technology. Applicants must be able to demonstrate that the product is ready for commercialization and market entry.
There is no limit on the number awards a company can receive, but there is a limit on the amount of funding available for a single project, state officials said. Awards are made on a per-project basis and the maximum award shall not exceed $150,000 for a single project with the assistance likely to be in the form of a loan or royalty arrangement.
“The success of the Demonstration Fund was the result of dedicated and motivated industry leaders from across Iowa whose vision was to grow the innovation economy by investing and mentoring emerging tech-based companies,” Nelson said.
“Those of us involved with the applicants soon learned that the real value was the mentoring with the dollars being a close second,” he added. “Each recipient was asked to provide confidential feedback to the (Iowa Economic Development Authority) which confirmed our belief.”
Branstad said his administration is “perfecting and improving” a plan launched under former Gov. Chet Culver’s guidance, and IEDA Director Debi Durham said the Branstad administration has asked for $2 million in fiscal 2014 to further fund innovative concepts.
The Demonstration Fund supports commercialization activities by small- and medium-sized Iowa companies in the advanced manufacturing, biosciences, and information technology industries. The primary purpose of the fund is to help businesses with a high-growth potential reach a position where they are able to attract later stage private sector funding.
“It is essential that we have tools in place to help Iowa’s high-growth, innovation-based companies succeed in our state,” Branstad said. “The Demo Fund is one way we have to do that and because of this report, we know quantifiably that the state is seeing a return on that investment.”
The creation of the Demonstration Fund was an outcome of the Iowa Innovation Council, an industry-led group that develops strategies and long-term plans to ensure that Iowa remains globally competitive in innovation-based enterprises. The Iowa Innovation Corp., a private non-profit organization created by the Iowa Innovation Council, has implemented a campaign to expand the success of companies, like the Demonstration Fund recipients, by fostering partnerships to create a statewide sustainable innovation network and advocating for ongoing innovation-based resources to grow Iowa’s economy.
Officials said the Iowa Demonstration Fund Combined Economic and Fiscal Impact study was a third-party review intended to quantify the impact of the Demonstration Fund on the Iowa economy. The report was authored by Econosult Solutions Inc. and was commissioned by the Iowa Innovation Corporation in partnership with the Iowa Economic Development Authority and the Iowa Innovation Council.