Anne Barth: A model funding program to grow jobs
IN West Virginia, and indeed much of the "flyover' part of the country, the lack of access to risk and investment capital poses a major hurdle for inventors, entrepreneurs and small businesses.
TechConnect West Virginia sees this every day.
Much of the sources of risk capital, such as from venture capitalists, are concentrated in a few cities such as Boston, Washington, Austin, San Francisco, Los Angeles, and Seattle. Most of the rest of the nation has to fend for itself when it comes to sources of adequate risk capital.
And, without these funding resources, it can be difficult - or even impossible - to turn an idea into a working product, to start a new enterprise, or to expand an existing business.
Recognizing this obstacle, the West Virginia Jobs Investment Trust led an initiative beginning in 2011 to create the West Virginia Capital Access Program (WVCAP).
WVCAP is designed to equip startups and small businesses with the capital they need to invest, expand and create jobs. The state-run program has access to $13.1 million through the State Small Business Credit Initiative, created under the federal Small Business Jobs Act of 2010.
These funds are providing a tremendous boost to the state's ability to provide some financial support to promising business ideas or to help expand companies with good growth potential. More importantly, these funds are helping to create and retain innovation jobs across our state.
In just 22 months, the WVCAP program has enabled the retention of 481 West Virginia jobs and the creation of another 361 potential new jobs within the next 24 months.
It has attracted $57 million in matching private investment. Fifty funding requests have been approved throughout the state across a wide spectrum of industries. And in terms of deploying the funding, West Virginia is second in the nation. That is quite an achievement!
Because of the WVCAP program's success, TechConnectWV was pleased to honor it as the first recipient of the "Investor Recognition Award" at our Spirit of Innovation Awards event. The award review committee determined that the WVCAP accomplishment deserves honor and praise, and presents a model of what can be achieved if more funding is available to support new ventures or growing small businesses. It also offers an opportunity to explore the ingredients that made it so successful.
Several strategic components contributed to the program's success, including an inclusive, shared approach. The eight partners represent a variety of organizations and agencies with an economic development mission throughout the state, and the WVCAP will allow each to strengthen their capital base.
In addition to the West Virginia Jobs Investment Trust, other organizations are INNOVA, the Mid-Ohio Valley Regional Council, the Natural Capital Investment Fund, the New River Gorge Regional Development Authority, the Wyoming County Economic Development Authority, the Regional Economic Development Partnership, and the Council for Rural Health Development.
The program was widely publicized to spread the word in all regions of the state. As a result, the funded projects are geographically dispersed across West Virginia and represent diverse industries including scientific educational products, instrumentation, alternative fuels, methane gas cracking, bioscience, recreation, retail automotive, day care, homeopathic products, and farming.
Because funding alone is often not enough to enhance growth, operational assistance was provided, thanks to support from the Claude Worthington Benedum Foundation and the WV Department of Commerce. This funding is helping many of the applicants with their business planning/development and to be better prepared to gain funding approval. This is essential as many of these businesses are at a stage where they could benefit greatly from added professional, legal or technical assistance and services.
And finally, the WVCAP provided a mechanism for the partners to collaborate on a regular basis on their loan activities. The ongoing dialogue set the stage for co-investing on several transactions that were beyond the capacity of an individual WVCAP partner.
That framework - and the trust that underpins it - is still in operation. If additional funding can be identified to sustain or expand the WVCAP program, West Virginia will be able to continue to reap the benefits of growing startups, expanding small businesses and creating new job opportunities.
Anne Barth is executive director of TechConnect West Virginia, a statewide, technology based economic development organization. Learn more at www.techconnectwv.org.