By Maxine Shapiro, KERA 90.1 Business Commentator
Dallas, TX – "With unemployment rising, our nation needs more small businesses to open " etc., etc. That was from the President's State of the Union address. Then why is funding being cut for small businesses? I'm Maxine Shapiro with KERA Marketplace Midday.
The funding for the New Market Venture Capital program run by the Small Business Administration has been eliminated. See, this wasn't just any kind of funding; this money was specifically geared to venture capital firms that provided equity capital and entrepreneurial expertise to small businesses in economically distressed communities. That's where the "help wanted" sign is so badly needed. Venture capitalists are a little reluctant to invest in small businesses in troubled urban and rural communities. This funding was an incentive to do just that.
The real shocker is the funding cut was added to the Omnibus Appropriations Act after the House and Senate considered the bill. According to a venture capital trade association that finances businesses in low-income areas, congressional supporters had no clue they were voting away the funding.
That was Round Two of the funding. Round One was off to a good start. Last week you might have heard about a small start-up company in West Virginia, Butterfly.net, announcing a lucrative agreement with Sony and IBM. They developed a technology that allows multiple computer users to interact together simultaneously. Butterfly.net received its funding with New Market Venture Capital. CEO David Levine told me this morning that Martinsburg, West Virginia is a very depressed area. It's no Silicon Valley, where money and talent is plentiful. Levine expressed his disappointment in the elimination of the funding. New Market Venture Capital not only helped with the initial start-up but $200,000 in operational assistance. If you're wondering where Martinsburg is, it's a $200 cab ride from Washington, D.C. Just ask the Wall Street analysts who mistook them for a nice suburban company.
For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
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