Nebraska State Sen. Heath Mello introduced LB1114, a bill that would study venture capital and extend grants.
A bill in the Nebraska legislature would create a $50,000 study to examine ways to support and increase venture capital in the state, including an analysis of best practices in other states.
If the bill passes, the study would be completed by December and provide recommendations for future policy suggestions. The same bill, LB1114, also extends the Business Innovation Act‘s expiration date by five years to December 2021.
Last week, the bill was unanimously approved by the Appropriations Committee and received a priority designation, which gives it a better shot to be voted on by the entire Unicameral.
Nebraska State Sen. Heath Mello, who co-sponsored the bill with Sen. Galen Hadley, said he thinks it can pass this year since it doesn’t have a large fiscal impact and focuses on continuing a successful program in the 2011 Small Business Innovation Act.
“We need to put more time, energy and focus on tech-based economic development,” he told Silicon Prairie News.
While Nebraska’s venture capital scene has improved in recent years, Mello said, it still lags behind other states.
“For one reason or another, it’s more difficult for startups in the Midwest to get access to capital,” he said. “We hope this study helps us find ways to open up access and create more opportunities to get more venture capitalism in the state.
“It would be another tool in the state’s toolbox to continue to grow the economy.”
Mello said he hopes the study would find the best model to do that.
Many other states have found succesful models, like Invest Maryland, Mello said. Another Nebraska bill, LB1019, the Development and Venture Enterprise Act, is modeled after the Maryland program. The Maryland Venture Fund is a state-funded equity fund for young technology and life sciences companies. InvestMaryland, a program overseen by the fund, in March raised $84 million through an insurance tax auction to invest in seed and early-stage companies, according to the Baltimore Business Journal.
The Nebraska version would create a similar public/private partnership for a state-funded venture capital fund through the Department of Economic Development and local partners. That bill may not go anywhere after it was not voted out of committee, yet.
Mello said he’s had a lot of questions from small businesses about what Nebraska can do to grow its venture capital scene. He said they have tried to address the issue with angel tax credits and the Small Business Innovations Act.
“There’s more to be done,” he said.
Mello: Small Business Innovation Act needs extension
Passed in 2011, the Small Business Innovation Act provides funding to help early businesses develop new technologies that lead to quality job opportunities across the state. Mello calls the act “economic gardening” because it helps give high-growth businesses a competitive advantage to expand faster.
Competitive grants provide funding and technical assistance for research at Nebraska institutions, new product development and testing and help expand small-business and entrepreneur outreach efforts. The Act is set to expire in 2016, but Mello said it should have more time to take root so he’s asking for an extension until 2021.
Seven entities in and around the tech space testified in support of the bill last week, including representatives from Pacific Engineering Inc., PHYND Technologies, Power Sports Nation, Trak Surgical, Pipe Wave Solutions LLC, the Nebraska Chamber of Commerce and the University of Nebraska Medical Center.
“[High-growth tech businesses] are a growing segment of Nebraska’s economy and I can only imagine it continues to grow with the changing global economy,” Mello said. “We’re moving toward an economy based on innovation and new products. That’s the future, and tech is the driving force.
“Both Omaha and Lincoln have examples of this growth potential, but we’ve even seen tech businesses come out of Kearney and rural Nebraska. It’s statewide.”
Mello says an extension of the Act can help grow even more businesess.
Credit: Photo from Nebraska Unicameral website.