Expanding Access to Investment Capital

Idahoans excel at inventing and advancing innovative ideas, but they are less successful at taking those innovations to market – a fact illustrated by the 2007 Kauffman Foundation rankings. Idaho is 6th in “Innovation Capacity,” but drops to 38th in "Venture Capital Investment".

Some intellectual property requires additional investment and research before it can be commercialized. After innovative ideas from the laboratory are protected and exposed to the marketplace, additional investment capital may be needed to analyze markets and promote products/services. New start-up companies will require funding for operations. This is where Idaho investors have an opportunity to help the economy while developing intellectual property and assisting start-up companies.

Currently, Idaho’s angel investment groups tend to invest rather conservatively relative to other states, and in some cases, the fees they charge are prohibitive for a fledgling start-up company. The few venture capital firms investing in and around Idaho tend to look for more mature opportunities, and rarely invest without co-investors. These conditions are not conducive to entrepreneurial and concept-to-market based economic development, particularly in high-tech industries where product development tends to be capital intensive.

It’s imperative that Idaho cultivate idea and seed capital investors to get technologies improved, products developed, prototypes produced, and companies off the ground.

One way to accomplish this is through accredited investors. The good news is that Idaho ranks high in the nation in per-capita millionaires* and other high-net-worth accredited investor’s -- household incomes in excess of $200,000 per year. If these investors were encouraged to provide idea- and seed-stage investment capital, more technologies and products could be developed -- resulting in new companies that qualify for the higher level investment groups that are more readily available.

Another way to strengthen Idaho’s economy is to encourage immigrant investment into Idaho by establishing an Idaho EB-5 Immigrant Investor Program. By channeling investment through the EB-5 Regional Center toward a centralized, statewide technology deployment center, unique opportunities for private/public partnerships will be fostered. Consequently, limited resources will be maximized by consolidating and stream-lining services that would be too costly for various companies and institutions to offer independently.

These two synergistic strategies – accredited investors and immigrant investment, would make a significant impact on Idaho’s economy.

*According to 2006 figures from the state Department of Taxation and Finance, Idaho had 24.6 millionaire households per 1,000 households. Manhattan on the other hand, had 22 millionaire households per 1,000 households.