Venture Capital Set To Flow In Minnesota

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Business plans

Minnesota is setting the stage for state-backed venture capital to flow to all kinds of businesses.

Local governments would recommend community small businesses under a proposed bill. The bill would create a revolving loan fund under a Minnesota Business Venture Capital Program administered by the state Department of Employment and Economic Development.

Under the proposal, local governments that have identified promising business proposals in their community would submit an application to DEED, which would administer the venture capital program. The application would detail the project and how the loans would support job growth in the community.

The department would then review the loan request, giving priority to projects that are:

~ Located in an area or a building that is in need of redevelopment or restoration.

~ Utilize federal stimulus money.

~ Reduce greenhouse gas emissions and dependency on fossil fuels.

~ Assist resident entrepreneurs and businesses to initiate or expand in a manner that creates sustainable jobs.

~ Support research and development of innovative, non-traditional uses of resources available in an area.

~ Integrate support services and businesses in a central location.

~ Reach out to certain populations that are underrepresented in the workforce.

The venture capital program would also target the low- or no-interest loans to parts of the state facing the most difficult economic hardship and high unemployment rates.

The revolving loan fund administered by DEED would involve a competitive grant process, she said. If a local unit of government has a project that it thought would be a good investment, in creating jobs and meeting the program criteria, it could submit an application to DEED which would review the loan request, giving priority to those that meet the criteria.

Calling for “green jobs” is one criteria, “but it doesn’t say that the project has to meet all of those things,” Olson said. “There’s just been a lot of emphasis there lately, and so I was trying to combine with that, to encourage moving in a direction that would help to enhance the other policies that we’ve already passed or would match up with some of the money in the federal stimulus or other money we’re expecting from the federal government.”

Some of it is targeted to under-represented areas, she said. “It’s targeted specifically toward areas that have the highest unemployment and relatively low household incomes,” Olson said, “so we can try to put this money where it’s really needed the most. Of course, that just happens to apply to a lot of my district.”

The program would see initial funding from the state’s general fund, but the bill doesn’t specify how much. That will be up to budget committees and legislative leaders, should it get that far.

“It offers a framework for an economic development stimulus plan, and if it would be funded this year really remains to be seen,” she said. “The big question is if there is going to be any money. … If we were really going to do this in a really effective way, and do it statewide, it could be many millions of dollars. … I could think of lots of good uses for even $1 million in my district.”

Note: The bill has not yet passed. If you reside in Minnesota, now is the time to contact your local state representatives to nudge it along! Then get your business plan ready for funding.