Tuesday, September 27, 2005

Silos as Hi-Tech Accelerators

High-risk municipal incentives are not needed to kick-start next economy companies. Speculative bets are the domain of the private sector. It is not Council's mandate to provide seed capital. Needed is a culture conducive to starting and growing businesses, i.e. an arms-length role by council in coordinating and cultivating.
By underwriting London Economic Development Corp'n and contributing to various incubators, London taxpayers already prime the growth pump to the tune of $30 millions annually. Some would have us "up the ante" another 2 to 3 million. Out-of-control civic expenditures outpace home-owner tolerance for aggregating yearly tax increases ...and send progressive businesses to better managed jurisdictions.
Venture capitalists shun early stage investments. Why would a city council venture where professional VC partnerships dare to tread ... and draft taxpayers as guillible investors?
The most attractive lure for new entreprneurs is a competitive tax level. It is attained by operational management -not equity risk management. The city will never have the expertise to compete with angels, banks and venture capital firms. Stick to municipal basics. Do them well, and economic health follows.
To play devil's advocate: if the city has no business being lead VC, what in the name of economic development can be salvaged from the Next Economy Report?
1.Synergy amongst city silos : LEDC, Stiller Center, and TechAlliance should realize economies of combining info-structure before infusion of new civic money is even considered. Industry and university collaboration is best for fostering home-grown hi-tech. Any government-sponsored VC pool should be left to the Feds or the Province a la Israel's Yozma fund.
2. Regionalism: This would be a noble departure for London. A place to start is working with municipal partners from Woodstock to Strathroy in lobbying for an extended 403 trade corridor. Short-sighted turf mentality is the barrier.
The single-silo Toronto Region Research Alliance (with Fed and Prov support) also chases the holy grail of a high-wage economy. Unlike London, there is no sign that Toronto City Hall dares take equity positions in early stage startups.
New Directions: We have to decide between an emerging research, development, and commercialization center ...or an encroaching wilderness. Tree City's council must reverse its back-woods image and get its priorities straight by putting "open for business" ahead of saving old buildings that have outlived their usefulness ...and using property taxes to acquire woodlots at subdivision land prices.
T'is time for those seeking re-election to worry more about high taxes and decaying infrastructure and to worry less about promoting the hip element and starting a municipal venture capital pool. Millwaukee recognizes the drivers of standard of living are competitiveness and productivity. Its next economy slogan is "Competitive City." Also, for reality in the post dot com economy, read Uncool Cities.
Only enlightened leadership can instill the requisite "next economy" mind-set on Council ...and curtail excess zeal for investing tax dollars in nano/bio start-ups, woodlot acquisition and decrepit building preservation.

Old posts may be updated with new information. Re-visit.

  • With their location and cultural mix, Montreal and Vancouver rate high on Fast Cities. All speed-readers (and Prof Florida fans) should click on those side bar titles.
  • Within weeks of Christmas, creation of the new London Regional Development Development Board is announced as a merger of LEDC, TechAlliance, Stiller Centre for Biotechnology and the Small Business Centre.
  • While regional members in the new single silo are sparse, we still expect to see a noticeable leap in our region's techno-competitiveness. Regular reports on projects and results would be appreciated; no need for expensive annual high-gloss PR ...just a straight-from-the-shoulder blog by the honcho would suffice.
  • A week before commercial Xmas, a couple of tech-hip councillors use their BlackBerrys to message that the Civic VC fund died before birth ...and that a city-funded agri-expressway is among the walking dead.
  • On the eve of the penultimate longest night: Merry Holiday to all, and to all a good hike!
  • Dateline Queen's Park Nov 15, 2007 7, The Provincial Liberals have assembled a Super VC fund with four institutional investors to administer an initial $165 million pool.

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