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Florida Commits $1B in Pension Funds to Venture Capital Firms

April 26, 2004

In an attempt to attract more bioscience firms, Florida will invest up to $1 billion of its $102 billion employee pension fund into venture capital, the State Board of Administration recently announced. A forum was held last week by Enterprise Florida, the state's economic development agency, to outline the investment plan to more than 80 venture capitalists in attendance.

Leading the forum was Coleman Stipanovich, director of the State Board of Administration, Richard Lerner, president of the Scripps Research Institute and Gov. Jeb Bush. The pension fund is part of $5 billion the state puts into alternative funds to be used for higher risk investments, Stipanovich said. The first installment will be $350 million during the next 12 months.

With the Scripps Institute set to receive $569 million in state and county funds to build a research campus in 2006, spinoff research likely will be passed on to new companies in Florida, the Palm Beach Post reports. The message being sent to investors, the newspaper contends, is Florida becomes a good place to invest capital. The Scripps Institute is obligated to create only 525 jobs; however, 40,000 spinoff jobs could be created within the next 15 years, Gov. Bush said.

Some investment experts say using retirement funds for political or economic development goals may be too risky. When the Houston-based Enron Corporation collapsed in 2001, Florida’s pension fund lost $325 million on Enron stock, more than any other public pension fund. However, the state's lack of venture capital forces entrepreneurs to look for other sources of funding, something Gov. Bush said he intends to change. Lerner and Gov. Bush both want to tap the South Florida community of wealthy angel investors who have retired there or vacation frequently.

More information on the investment plan is available at: http://myflorida.com/b_eog/owa/b_eog_www.html.main_page