Everyone agrees that Maine’s traditional industries alone are not going to provide the jobs we need to recover from this recession. But if not them, then what is?

At least part of the answer lies in new businesses in the technology sector that provide higher pay and more security than older businesses, which are now struggling with plant closures and layoffs.

The challenge for public policymakers will be helping these new businesses get started to replace the jobs that have been lost and, eventually, allow the economy to grow.

Two bills before the Legislature would take small steps to make that happen and deserve support.

If you ask people who have or would like to start a new business what their biggest impediment is, they say access to capital. Unlike established businesses that can borrow against assets to expand or diversify, start-ups need equity investors who are willing to take a chance on a new idea. Maine lags behind all of the other New England states in venture capital invested as a percentage of gross state product, making this a hard state to launch a new business.

One of the two bills, LD 1, would create incentives for money in the Public Employee Retirement System that has already been targeted for equity investments to be placed in funds that are seeking to invest in innovative Maine businesses.

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To sweeten the pot for those funds, the state would create a mechanism to guarantee up to 80 percent of money put at risk in those Maine businesses. It is similar to the kind of loan guarantees for economic development projects already carried out by the Finance Authority of Maine.

The other bill, LD 1666, would increase the seed capital tax credit from 40 percent of an eligible investment to 60 percent.

It would also make the credits available for investments throughout the state instead of just areas with the highest unemployment.

The idea behind both programs is establishing connections between investment funds and innovators in Maine. Once they have personal connections and established track records, they will be able to generate their own business. But government can play a role in getting this activity started.

The bills won’t turn Maine into a Down East Silicone Valley, but they could help start the businesses that will build Maine’s future.

 


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