Friday, May 30, 2008

How We See It

Sometimes a great notion ... waits a year

By Mass High Tech Staff

A proposal in Maine to create a fund of funds that would pool as much as $80 million in private equity investment for emerging technology startups won the approval of both the House and Senate of the Pine Tree State, but Gov. John Baldacci chose not to sign the bill into law, citing too great a risk on the state as it was written.

Maine’s statewide technology company association, TechMaine, has already said it is working with the Baldacci administration to retool the measure, which offers refundable tax credits to capitalize a fund-of-funds program within the state’s Small Enterprise Growth Board. The measure was modeled on statutes that appear to be working in such states as Arkansas, Iowa, Michigan, Montana and Utah. Other early stage funding programs in Maine include the Maine Technology Institute (MTI), founded in the late 1990s to make grants for new technologies at the development stage, and the Venture Capital Revolving Investment Program, created in the mid-1990s, under the Finance Authority of Maine (FAME).

Explaining his pocket veto, Baldacci said the tax credits could cost the state’s general fund nearly $19 million per year. “Given the instability in financial markets and in the national economy, Maine must be very cautious in how it invests the people’s money. This bill would guarantee a rate of return for venture capital investors while Maine would shoulder all the risk.”

At the same time, Baldacci acknowledged that “the bill holds the potential to be a new economic development tool.” In fact, it’s a tool the other northern New England states should consider.