With this pre-Christmas announcement, the Michigan Pre-Seed Capital Fund has now made 18 investments totaling more than $4 million to companies that are creating and retaining jobs in Michigan. Fund officials say their investments have retained 87 jobs and will add 300 more in both 2008 and 2009 in the fields of advanced manufacturing and materials, alternative energy, homeland security and defense, and the life sciences.
Pre-seed funds provide entrepreneurs with start-up capital to help turn ideas into businesses. By investing early, venture funds can also help leverage additional investment by taking on some of the risk from promising, but untested, businesses. In Michigan’s case, the $4 million allocated through our pre-seed fund in 2007 attracted an additional $6.5 million in private investment, resulting in total investment of more than $10 million for Michigan start-up companies. In addition to business and job creation, these investments can also provide significant returns on investment, regardless of whether the investors are public or private. In Maryland, for example, their Maryland Venture Fund has returned more than $57 million to state coffers while attracting more than $1 billion for Maryland start-ups; creating more than 1500 jobs (with an average salary of $70,000, nearly twice the state average); and producing an annual rate of return estimated at 20%!
As this news makes clear, we’re already taking steps toward diversifying our state economy and moving Michigan firmly into the new economy. In a report released late last year, Michigan-based Public Policy Associateshighlighted the extent to which our continuing economic woes are less the result of a “one-state recession” than they are a one-industry (automotive and heavy manufacturing) recession. The report notes that between December 2002 and August 2006, the 25 fastest growing sectors of our state economy actually added 122,500 jobs, with more than 55,000 of these jobs coming in areas “emblematic of the new economy.” Just as notable, of the top 25 fastest growing sectors, fully two-thirds of these sectors are new economy sectors. In comparison, only five of the top 25 declining sectors are new economy sectors, and several of these are also manufacturing related. While there is no denying the devastating role the decline in manufacturing is having on our state and our people, the report shows a silver lining to all of this and provides some basis for hope, provided we take advantage of it.
What we need to get from here to there is what Reverend Peter Gomes calls “active patience.” Active patience, Reverend Gomes explains, is essentially what farmers do between planting and harvest. No matter what they do, they can’t force their crops to grow any faster than they’re going to grow; that’s the patience part. But a farmer would be foolish to simply plant, wait and then expect to harvest. Any farmer knows that while you can’t rush the process, there is an awful lot that must be done between planting and harvest if that harvest has any hope of being a good one; that’s the active part. Only by combining the two – patiently waiting for the future to arrive while doing everything you can today – can you help ensure the future is what you hope it will be. That’s active patience.
As we complete our economic transition from the heavy manufacturing jobs of the past to the information-driven jobs of the future, we need a good dose of this active patience. Reports like the one produced by Public Policy Associates show both that we’re on the right track, and just how far we have yet to go. Information like that released by the Michigan Pre-Seed Capital Fund shows that we’re continuing on that path, not simply waiting for or hoping for a brighter future, but doing all we can to build that future today.