Mississippi’s state government is going through the same budgeting problems, as the other 29 states having negative budget projections. Although most agencies in Mississippi should share in the austerity efforts, a couple agencies actually would reduce future tax incomes if they are affected. One project that comes to mind is the highly productive “Innovate Mississippi,” which plays a crucial role in economic development of new technology companies in the state.
In reviewing data based on the last seven years of funding and jobs created by Innovate Mississippi’s work, it assisted in creating more than 5,500 technology-based jobs in Mississippi at a cost of only $1,012 per new job. Keeping in mind that most of these companies grow at a higher rate than the average new business, our future rests with increasing technology-based businesses — not decreasing new jobs. Cutting this source of growth for Mississippi is short-sighted. The annual income taxes generated and the pass-through spending by 5,500 new employees eclipsed this low cost.
Increasing funding to the Innovate Mississippi agency will lead to more new technology companies. Cutting its funding, however, would lead to fewer new technology companies in the future. Is this what the legislative branch is really trying to accomplish?
We are all familiar with the $100 million in deals reached last month by the well-known “Shark Tank” investors on television. Most Mississippians are not aware the same format of raising money from investors is being used in our state. Yes, it is the Innovate Mississippi crew that recruited many of us, as angel investors, to contribute to the growth of the new technological-oriented companies in our state. This has proven to be much cheaper than any other state’s traditional incentives, and it is much more important.
New, startup technology companies tend go where they are funded, so without Innovate Mississippi, the higher-growth technology companies will get funding from Austin, New Orleans, Memphis or Nashville — and grow there instead of here. Why? Large investors (“angels” and “venture capitalists”) invest for two reasons: They want to make money and they want to bring technologies closer to where they live.
Although the economic benefits of internally funding new technology companies within Mississippi may be too complex for many of our state representatives in Jackson, it is up to our citizens with economic training to inform them of the value of increasing the number of new companies and jobs. In my experiences, Innovate Mississippi is as important to generating new jobs as any of our regional economic-development commissions.
Louis J. Finkle Ph.D., a retired professor living in Biloxi, is a business developer and investor.