LINCOLN, NE – Today, State Senators Heath Mello and Galen Hadley released the report: “Supporting and Increasing Venture Capital in Nebraska.” This economic impact analysis and best practices report, prepared by Invest Nebraska, was part of LB 1114 which was approved unanimously by the Nebraska Legislature and signed into law by Governor Heineman earlier this year.
“Nebraska has experienced significant growth in its entrepreneurial and innovation ecosystem since 2010 when the Legislature’s Entrepreneurship and Innovation Task Force began analyzing entrepreneurship and the needs of small businesses and startups in the state,” said Senator Mello. “This report reveals the significant economic impact the existing Business Innovation Act programs have had on our state economy and provides a roadmap to explore additional state resources for venture capital in the state.”
Administered by the Nebraska Department of Economic Development, the Business Innovation Act consists of financial assistance programs from $50,000 up to $500,000 for the state’s technology startups and small businesses. The programs are intended to spur innovation and commercialization in the state, create new high-growth businesses and increase the number of venture capital ready businesses.
The economic impact study, written by Dr. Eric Thompson of UNL, found significant private sector investment for each dollar of state support. Small businesses and technology startups participating in the Business Innovation Act programs raised $5.12 in private investment funding for each $1 dollar of state funding.
Participating business earned $2.32 in revenue for each $1 of state funding and created a total of 307 jobs with an annual average annual wage of $49,609. From the total $7.3 million of states funds devoted to participating companies during the period October 2011 through June 2014, the total annual economic impact for the programs was $53.45 million.
“The results of this study clearly demonstrate that by planting the seeds with today’s entrepreneurs and innovators, we are growing Nebraska’s future high-growth businesses,” said Senator Hadley. “Due to the leadership of Governor Heineman and the Legislature in having the foresight to create these programs, Nebraskans should welcome the strong economic impact numbers found in the report. Extending the Business Innovation Act until the year 2021 under LB 1114 indicates the Legislature’s commitment to Nebraska’s entrepreneurs and innovators.”
The second part of the report provides research and analysis of the best practices with state venture capital programs in other states and makes recommendations to support and increase venture capital in Nebraska. Written by Cromwell Schmisseur LLC, these recommendations provide a roadmap for additional state resources to build on the foundation established by the Business Innovation Act.
The Cromwell-Schmisseur analysis of best practices from other states resulted in three main recommendations: 1) Consistently support and possibly increase financial support for the Business Innovation Act programs; 2) Leverage the Department of Economic Development’s resources and existing state incentives to recruit venture backed high-growth small businesses to the state; and 3) Begin planning for a state-sponsored “fund-of-funds” venture capital program that includes a focus on financing “emerging managers” of venture capital funds based in Nebraska.
“Nebraska has the key ingredients – leadership, creativity and capital – to emerge as the regional leader of a robust innovation economy,” said Dan Schmisseur, co-founder of Cromwell Schmisseur, a leading consulting firm on state-sponsored venture capital initiatives. “The Nebraska Business Innovation Act created a suitable foundation. What must follow is a sustained commitment of reasonable resources for NBIA programs and near-term targeted investments focused on increasing the supply and accessibility of risk capital for Nebraska entrepreneurs.”
To read the entire legislative study, go to:
FOR IMMEDIATE RELEASE
December 17, 2014
For More Information:
Sen. Heath Mello, (402) 471-2710
Sen. Galen Hadley, (402) 471-2726