Business

Earlier this week I wrote a post on my issues with the Economic Stimulus Plan passed by our Congressional and Senate leaders last week (and signed by our President yesterday).  Sorry – I don’t use this Blog to rant often, but this one ticked me off.  In the post I noted that $200M of the funds designated to Indiana are set aside with few strings attached. 

Former President Clinton summarized the three goals of the bill on Larry King last night:

1.  Put money in people's pockets who are in trouble now (e.g., extended unemployment benefits, modest tax cuts, increase in food stamps…).

2.  Give a chunk of money to State and Local governments for economic development.

3.  Create jobs through existing road and bridge contracts, through rail improvements, through modernization and especially through clean energy and energy efficiency.

Don’t get me wrong, I don't have a problem with any of these goals – but the point of the bill is to stimulate the economy not just create government jobs or extend welfare.  Those are right actions but for separate laws! 

Political and business leaders have come out of the woodwork with their ideas of how to spend the State funds (#2 above) – everything from improving 3rd tier city airports, to fixing up county roads to granting money to the failing recreational vehicle (RV) industry.

The number one driver for stimulating the economy is the promotion of innovation and entrepreneurship in our cities.  With that in mind, here is an idea for how the funds should be applied:

Imagine 1,000, $200,000 grants to emerging businesses.  Think about that for a second.  $200M divided by 1,000 is $200k - that would be 1,000 Indiana businesses that would be given REAL and DIRECT help by our State to advance innovation.

Change the numbers if you want – 500 $400,000 grants, or 200 $1,000,000 grants – doesn’t matter.  Key is, the money would be going directly to factors that actually stimulate the economy.

In my entrepreneurial law / funding law practice I have seen tons of start-up and emerging companies that would kill for a cash infusion like this – even if strings were attached and the money could only be applied to innovation initiatives.  This is especially true with my clients in innovative markets (e.g. Indiana technology, SaaS and software licensing).  This can be the difference of whether or not a business gets a good product to market.  As revenues and profitability grow, jobs are created… this leads to increased employment… which leads to increased community income… which leads to increased spending… which leads to a better economy.