With Georgia’s promising technology center still hamstrung by a lack of cash, Lt. Gov. Casey Cagle is pushing legislation to combine state money and private dollars into a new venture capital fund. It could be a game-changer for the kind of jobs the state covets, but it also comes with high risk.
Cagle’s proposal would dedicate $100 million in state money over the next five years to the fund, which would be overseen by an independent investment board. To do so, the state would offer up either tax credits or draw from its OneGeorgia fund, which it uses to seed economic development.
The board would recruit large venture capital firms to throw private money into the pot. It would then choose which startups to invest money in. If all goes well, based on each contract, it would recoup its original investment plus 80 percent of profits — which would go back into the fund. The firms would get the remaining 20 percent.
Georgia has been down this road before.
In 2004, lawmakers stopped a program to funnel $75 million in tax credits to small businesses because of state budget concerns and worries about the program’s effectiveness. A proposal that would have given $125 million in tax breaks to a few national investment firms died on the last day of the 2011 session, after state leaders balked that such “certified capital companies,” or CAPCOs, would wind up with both the principal invested and any profits.
This time, Cagle said, is different: “This is not CAPCO.” He expects a bill to be filed in the House within 10 legislative days, and has been working behind the scenes to gain enough support to get it passed.
Read more: AJC
