Vital ETF investments don’t get any attention
Emerging Technology Fund also supports public universities and applied research consortiums
With respect to the Houston Chronicle’s story “State tech fund under fire” (Page A1, Aug. 13) about the Emerging Technology Fund, I continue to be surprised at how negatively this valuable economic development program is portrayed, and how few of the facts are really understood about this fund and what it has done for Texas. A number of significant ETF advancements for the state were cited at the recent hearing before the Texas House Select Committee on Economic Development Incentives, but not mentioned in the Chronicle’s coverage. The fund has had some spectacular successes, the most recent being the ZS Pharma $ 107 million initial public offering. The fund has had, and will continue to have, its share of successful start-up companies, and I hope to see those on the front page as well.
Any early-stage investment capital fund with more than 140 investments will have winners, losers and companies in between.
The companies cited in the article that either complained about the state or moved to California did so because they didn’t get additional investment from the state for failing to achieve the performance milestones set by the fund. That’s exactly what a private sector venture capitalist would do — cut off funds to those who don’t perform. The state is doing a very good job of being a steward to the taxpayers’ funds as it requires performance of the fund’s portfolio companies.
As for transparency, I believe a review of other state early-stage investment funds will show Texas to be one of the few that report return on investment to its Legislature and job numbers from companies. The fund’s annual report also showed that the state’s $200 million investments in its 140-plus portfolio companies has attracted more than $ 1 billion in follow-on funding from private investors and others.
There’s always room for improvement in any state-run economic development program, and this will be the subject of hearings being held by the Texas House Select Committee on Economic Development Incentives. Other states use different investment models for early-stage companies, and they are certainly worth considering if the Legislature has an appetite to look at changing the direction of the fund. For my part, the Emerging Tech Fund has been a bold move at enhancing the ecosystem for early stage technology companies in Texas, and it would be a mistake to unilaterally disarm our incentive programs.
Besides the fund’s direct investment in early-stage technology companies, there are two other types of vital investments made by the Emerging Technology Fund that don’t get any attention. They are the $90 million that has been invested in our public universities to bring in the world’s best research talent to develop commercially viable technology and the $ 124 million invested in applied research consortiums of public universities and private companies who are developing cuttingedge products that give Texas industry a globally competitive advantage.
Universities and companies in North Texas have been significant beneficiaries of these investments, as have the universities in the Houston region. The state’s combined $214 million in investments in these two portions of the fund have been leveraged with a whopping $ 1.15 billion in investments from the private sector, the federal government and even the government of South Korea. That’s over a 5 to 1 leverage of the state’s dollars. Guess who gets to own the intellectual property developed by these university researchers and consortiums — the taxpayers of Texas.
Other states and countries constantly try to emulate what we’re doing in Texas. I hope the Texas House Select Committee on Economic Development Incentives analyzes what is working, makes improvements where warranted and resists the urge to toss out proven economic development tools.