Little help for small tech; Good ideas don't always breed success, so advisory council hopes more funding will help companies like Savicon find footin
BYLINE: KEN DEY
Six months ago, Bob Davidson´s company, Savicon, was set to hit the market with the Entegrator -- the Garden City company´s all-in-one solution to control everything from a homeowner´s electronics and computer equipment to the home´s security system.
With one handheld wireless touchpad, the user could surf the Internet, monitor security cameras and keep track of television, DVD and music systems. Davidson, a former engineer from Hewlett-Packard, did his homework on the Entegrator and was confident the market would embrace it.
But that never happened. The company couldn´t find the money to market the Entegrator effectively.
"It´s frustrating because I think we have a really good entertainment solution, but we´re not able to pursue that," Davidson said.
Savicon is indicative of many Idaho start-up companies. Davidson financed much of his company´s early operations with a severance package from HP after he took an early retirement and from some early investors who believed in his product. It´s called "bootstrapping."
That was three years ago. He´s kept the company running from the original group of investors who continue to periodically put in $20,000 to $50,000.
"What we really need to make it successful is a half-million dollars," Davidson said. "That would give us a solid six months of runway."
Lending a helping hand to Idaho´s fledgling high-tech companies isn´t a new idea.
It was at the core of a series of recommendations delivered to then-Idaho Gov. Dirk Kempthorne in 2000 by the Governor´s Science and Technology Advisory Council. But the progress on the recommendations has been slow at best.
FALLING BEHIND
Small companies like Savicon lack the political clout and the money to deploy armies of lobbyists at the Capitol to push their agenda to the Legislature. That´s translated into poor support for the industry.
"In general, Idaho has been underspending compared to what´s going on in the rest of the country," said Dan Berglund executive director of the State Science and Technology Institute , a Washington D.C.-based organization that tracks the amount of spending states contribute toward science and technology.
For example, Utah´s Centers of Excellence program receives about $2 million a year just to commercialize technology , Berglund said.
That´s taking research out of a university and helping turn it into a product or service that can be sold.
"Given the entrepreneurial culture in Idaho and the technical skills available in Idaho, it has a good future with just a little bit more investment," Berglund said.
While other states are spending millions to build the science and technology industry, Idaho only recently topped the half-million-dollar mark. The current state budget has $550,000 for programs directly related to science and technology.
But the funding picture for science and tech could change dramatically if the Legislature gives the green light to a nearly $50 million package of funding and incentives the Governor´s Science and Technology Advisory Council is recommending. The 16-member council , made up of government, education and industry leaders, says if Idaho wants to remain competitive, the time to act is now.
BUT IS IT ENOUGH?
The funding requests include $25 million for an Idaho technology stimulus fund, $10 million to improve broadband service, $10 million for the first year of a five-year technology investment tax credit, and $2 million to help market Idaho as a science and technology state.
Although the package is nearly 100 times the amount approved during the last session, John Grossenbacher, director of the Idaho National Laboratory and the chairman of the governor´s advisory council -- a post he´s held for almost two years -- agrees that it´s still not enough to bring Idaho up to the levels of other states.
"But I think this is a very good step forward that gets us beyond modest and moves us toward where we need to be," he said.
One of the most sought-after aspects of the package from those in the industry, like Savicon´s Davidson, is the technology investment tax credit.
It would provide a 45 percent transferable Idaho income tax credit for investment in a bioscience company and a 35 percent credit for investment in other technology companies. The credit would be capped at $10 million a year for five years. The hope is the extra incentive will spur more investment in tech companies.
"It´s very important," said Steve Simpson, director of strategic alliances at Kestrelink Corp. in Boise and the president of the Boise Angel Alliance, an organization that works to draw investors to put money into Idaho´s start-up companies. "One of the key challenges to foster an entrepreneurial environment is for early stage companies to have access to capital."
This isn´t the first time a tax credit or program to foster investment has been discussed. In 2002, the Legislature passed a bill that would have created an Idaho venture capital fund to provide money for companies. Kempthorne vetoed it. And just last session, plans for a tax credit for investors were shelved after Kempthorne said he wouldn´t support it.
Simpson, who helped develop the credit as the co-chairman of a state task force with Phil Syrdal, president of BioIdaho, remains optimistic that it will pass this session. "We have such a great opportunity to build some very strong companies, but we need new capital to do it," Simpson said.
SELLING IT TO THE LEGISLATURE
Karl Tueller, executive director of the Idaho Office of Science and Technology and a deputy director of Idaho Commerce and Labor, has served in state government for more than 20 years. He knows how hard it can be to get funding for new programs.
Kempthorne formed the advisory council in 1999 and tasked it with coming up with recommendations to grow the industry. The council delivered a 128-page report in 2000 with a list of recommendations, many of which remain unfilled today.
Sept. 11, 2001 and the declining economy put many of those efforts on hold. In 2003 the Office of Science and Technology was formed and the council refocused its efforts, but progress in gaining meaningful financial support from the Legislature has been slow.
"We were just kind of making nice little progress, but not doing what needed to be done," Tueller said. "We were not being taken seriously by the policy makers. They weren´t saying technology wasn´t important, but it never surfaced in the budget."
John Glerum, director of the Boise State University TECenter and the former CEO of Ore-Ida Foods , said getting the package of incentives approved is simple economics.
"I don´t think the state has any new money," Glerum said. "It will be incumbent on the Legislature to figure out how to reallocate what we already have."
Glerum said one of the first things Idaho´s political leaders need to understand is that they can´t count on the state´s big companies to keep driving the economy.
"Has Micron gotten any bigger? No. Has HP gotten any bigger? No. It´s probably gotten a little smaller," he said. "The reality of economic development is that 90 percent of increased employment comes from expansion of companies and start-ups. A very small percentage -- 10 percent or less -- comes from attraction (recruiting from out of state)."
Davidson said lawmakers have to remember that companies like Micron and HP were small at one point.
"I think people forget that," he said.
Davidson remains focused on growing his company even without funding. He has scaled back his product line and is now offering a control unit for the security market, which he hopes will be easier to enter.
But his dwindling company coffers are never far from his mind.
"I spend a lot more of my time fundraising and worrying about money than I would like," Davidson said. "It just distracts from being able to move the company forward by focusing on products and sales."
SEE SAVICON ON PAGE 5
To offer story ideas or comments, contact reporter Ken Dey at kdeyidahostatesman.com or 672-6757.