MISSOURI ONE STEP CLOSER TO $40 MILLION SEED FUND

Investment capital to develop and commercialize new technologies may soon be easier to find in Missouri. The Commerce Committee of the Missouri House of Representatives last week endorsed House Bill 753, a proposal to create a $40 million seed capital fund supported by Governor Mel Carnahan. The fund would be capitalized at $10 million each year for four years. Additionally, private investors would get a 100-percent tax credit for all money they contributed to the new seed capital fund. Investments would be limited to Missouri businesses.

To find money for the new seed capital fund, the bill calls for implementing a temporary suspension of the state’s corporate research and development tax credit, which is capped at $10 million a year. For four years, no new credits would be granted under the R&D tax credit.

The biggest losers under the proposal are the three large St. Louis corporations which claimed 69 percent of the credits last fiscal year: Boeing, Monsanto, and Southwestern Bell Telephone. According to published reports, none of the corporations has voiced opposition to the proposed plan.

While the proposed fund is to be privately managed, oversight would be handled by a new 13-member Missouri Seed Capital Investment Board. The board would be comprised of the director of the Missouri Department of Economic Development, seven appointees of the Governor, and five "representatives from innovation centers having contracts with the department to provide business services."

By July 1, 2000, the innovation centers are to develop and jointly approve a Missouri Seed Capital and Commercialization Strategy, which would include identifying 1-5 qualified funds that would invest the state’s seed capital. The board must then approve or reject the plan.

Under the bill, the selected funds are required to contract with the innovation centers so that the centers "receive and share equally at least 60 percent of the equity, dividends, or other earnings" generated from the fund. These monies must in turn be used for reinvestment in qualified funds to provide ongoing seed capital, start-up capital and follow-on capital for Missouri businesses.

The bill now moves on to the full House for its consideration.