Indiana technology budget cutsThis ticks me off.  I understand that in a struggling economy the State needs to make budget cuts, but instead of cutting spending in areas that ultimately do not lead to economic improvement, our State representatives are considering cutting spending in an area that have been the lifeblood of the State for the last quarter century – technology.

This may have a huge impact on my clients as my law practice centers on Indiana technology businesses – helping technology businesses get innovations to market and meet strategic business growth needs.  In particular, I work with a number of SaaS and software licensing businesses (as well as many biomedical and biotech firms).  My entreprenurial law / funding law firm provides counsel on private equity and venture capital, intellectual property and licensing, and general legal technology consulting. 

I believe at least a part of the problem that led to the proposed cut is that past technology funding has not proved itself to the State as creating jobs and causing a respectable ROI / economic increase for the State.  The State has sunk an overwhelming proportion of funded dollars into biomedical businesses (e.g., the 21st Century Fund has sponsored some 10 companies in the last 4 years that have products in development for cancer treatment). 

Don't get me wrong, those businesses are great and need to be supported, but the process of getting innovative concept to market for biotech and biomed companies is long and expensive.  Further, until the product is successful at market, significant numbers of jobs are not created.  So, funding ROI decreases (at least for the short term).  The overall funded portfolio should be diversified with other technology investments that will result in more jobs and more tax dollars back to the State quicker.

Investments in Internet and SaaS companies could be that answer.  For $500k to $1M, most SaaS companies can get product to market and begin generating revenue.  Job creation and the ROI on invest dollars is proven quickly.  Innovation is encouraged, businesses are built, jobs are created.  This all leads to fast economic impact.

I believe Indiana’s past approach on technology funding was flawed, and I think that is shown in the distrust of the State legislature to invest further dollars in technology.

That said, some recent conversations I have had with State leaders involved with technology funding gives me some hope.  These particular unnamed individuals appear to be looking for more solid investments that will quickly lead to jobs.  They are also not only looking at investments in companies that have connections to political dollars (another problem with certiain past State investments).  They also seem to be thinking a bit more broadly about what defines “innovation”.

For those readers of this blog in Indiana, contact your State representative and ask them to continue to fund technology.