Last One Off the Clue Train is a Rotten Peach!
Urvaksh over at the Atlanta Business Chronicle recently published an article providing some coverage of the new $250M fund being launched by the State of Florida. After reading it, I became engulfed in a sea of emotions, ranging from frustration to anger, finally settling on a mix of sadness and reflection.
The short version: This new Florida Growth Fund will not only provide capital to venture capital firms (in the form of Florida being an LP – Limited Partner), it will also co-invest (follow, not lead) directly in technology and growth companies. The fund will be managed by a private equity firm on behalf of the Florida Retirement Pension Fund.
Georgia is the last state in the Union that does not allow private equity investments out of the state’s pension funds. “Last.” Wow. Now there’s a word that simply emanates innovation. Nothing says “cutting edge” like being listed as “last”.
“Last.” That means that North Dakota is ahead of us in terms of allowing private equity investments from state pension funds. WTF? Pinch me.
For all the hemming and hawing we hear from the state government about how great Georgia is for innovation, we’re really doing a pretty lame job of walking the walk, and leading by example. We can pass a bill that invites the 2009 Georgia Peach Queen to appear before the House of Representatives, and slash the budget of the ATDC, but we can’t drive through a key piece of legislation to propel the Georgia economy into the 21st century.
“Last”. You may also recall that Georgia is also “last” (or at least close to being “last”) in another category as well – public education for our children. It is no coincidence. We clearly have a remarkably uneducated group of people keeping us from joining the rest of the country in diversifying the state’s investments in the private sector. Guess that lack of education has already caught up to us.
Does our state government really take these issues seriously? Certainly there are some – many of whom I’ve met and had great conversations with. But as a whole, no. There are those that are hell bent on laying down in the middle of the street and preventing progress.
The most common arguments that I hear from opponents of such legislation is that it is “too risky” and “wouldn’t provide much in the way of economic development for anyone but Altanta.” Humor me for a moment.
The Georgia Public Policy Foundation, which is a non-profit, independent, public policy think tank, recently published a very interesting article. In the article, they cite the “lack of diversity” within the investments of the state’s pension funds. Every investment has risk, but obviously the only defense against market risk is diversification of investments. “Diversify or die”, as I like to say. Not diversifying is even riskier. They lay out a pretty compelling case across the board. Read the article – it’s short and worth it.
With respect to the whole notion that Atlanta would be the sole beneficiary of such investments – that is simply ludicrous. What these pundits fail to realize is that this is an ecosystem, not a one-way street. All boats rise with the rising tide. Would those dollars necessarily create direct jobs in rural areas? Probably not, or certainly not that many. Companies that attract venture capital and private equity investment tend to be fast-growth and/or high-tech companies, and those require infrastructure and a large labor force. And those things exist in abundance in Atlanta, but few other places within the state. But, what those investment dollars would do is create an economic return for the state. And those additional dollars eventually make their way into port projects in Savannah, highways, schools, agricultural programs, and other projects around the state. Viewing this issue through any other prism is negligent in my view.
Normally, I would tell everyone reading this to contact your local state representative or senator, and tell them why you think passing legislation to allow the state to invest in private equity funds would be a good thing. But we’ve all done that already. Several times (SB80, HR249, etc). I tire of the whole thing.
The only thing that can save us now is the passing of time, and the hope that at some point, enough rational people are voted into office to get us back on the right track.
“Last”. I hate being last, don’t you?
Cheers.
