Legislation would create fund, matching programs for small business and research
MORGANTOWN — Two pieces of legislation aim to diversify West Virginia’s economy — one by providing entrepreneurs with access to additional capital, the other by incentivizing research and development by smaller companies.
House Bill 4558 would establish the Entrepreneurship and Innovation Investment Fund, which would be administered by the West Virginia Development Office, part of the Department of Commerce.
“The West Virginia Development Office shall use moneys in the fund to support entrepreneurship, creation of business startups, improvements in workforce participation and attracting individuals to relocate to West Virginia,” the bill reads.
Del. Moore Capito, R-Kanawha, is the lead sponsor of the legislation. He said the money for the fund would not be limited to the Legislature’s general revenue fund. Other sources would include appropriations provided by the Legislature, any money available from external sources and interest, and other income earned from investment of moneys in the fund.
“This really provides the state an opportunity to grant seed money to startups and to different entrepreneurial endeavors, I think,” Capito said.
He said there’s a one-way street going out of West Virginia in terms of talent, and the state isn’t being forward-thinking enough in its approach to the economy, especially when it comes to sticking to bedrock resources such as energy.
Looking at the national and global economy, however, Capito said a lot of the seeds planted came from a very low level — someone with a simple idea — and this legislation would send a message that those ideas are welcome in the Mountain State.
Carrie White, director of the WVU LaunchLab, has a favorable view of HB 4558 because many students with solid business ideas struggle to find the capital to get them off the ground.
“This looks like a very positive piece of legislation for our young entrepreneurs,” she said. “This will move the next generation of innovators forward if it is available to them.”
Eldon Callen of the Morgantown Area Chamber of Commerce said there is an interest in this bill at the Chamber, especially as it encourages people to start their own businesses rather than search for jobs. A big concern, he said, is a lack measurement for returns in development expenditures.
“The use of such an account is a positive if there are measurements put in place that will actually show that the dollars spent will actually bring a return to the taxpayers and the state,” Callen said.
He warned that if there are no measurements in place to monitor success, it will be harder to sell taxpayers on similar efforts in the future.
HB 4558 passed its third reading in the House of Delegates Feb. 28 and was sent to the state Senate.
Capito also sponsored House Bill 4544, which would create the West Virginia Small Business Innovation and Research (SBIR) and Small Business Technology Transfer (STTR) Matching Funds Program.
This program, also administered by the state Commerce Department, would match funds for in-state businesses that have already secured an SBIR/STTR phase-one research award from a participating federal agency. According to the bill, the participating businesses also must demonstrate that the sponsoring federal agency has an interest in phase-two research to receive a full match.
“We’ve got to start taking steps to get our young people, our entrepreneurs and our small businesses involved,” Capito said.
It’s important to show entrepreneurs that the state stands behind them, as well as to keep up with surrounding states that already have similar matching programs, he said, adding this is something the higher education community sees as a big concern.
“I look at that as a very positive step in the right direction for West Virginia,” said Anne Barth, director of the South Charleston-based nonprofit TechConnectWV. “There are an amazing number of everyday products you would recognize that started out with funding from SBIR. We do not produce enough of those.”
Examples of such products, she said, are Sonicare electric toothbrushes and LASIK eye surgery, touch-screen technology, self-driving cars, Kevlar, wind turbines and even flu shots. Qualcomm, Symantec and iRobot are examples of companies that emerged from SBIR.
Barth said the proposed program would be a good way to attract startup companies, which are always looked for ways to fund their research. She said bringing such a program to West Virginia cannot only attract and retain talent, but also grow the knowledge economy. She noted that phase-two SBIR/STTR research can fetch a million dollars, providing plenty of incentive for businesses to locate in states with these programs.
On Feb. 13, HB 4544 was sent to the House Small Business, Entrepreneurship and Economic Development Committee, where it remained as of March 1.
Capito said he doubted the bill could move ahead this late in the legislative session. If re-elected, however, he said he would introduce it again.
Staff writer Conor Griffith can be reached by at 304-395-3168 or by email at email@example.com