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Multiplier effect said to be secret weapon of economic growth

Limiting early stage funding for startup companies has major economic consequences in the long run, says Scott Meacham, CEO of i2E Inc.
by Scott Meacham Published: June 10, 2014

In any economy, there is a multiplier as a dollar turns over and creates more dollars.

An important aspect of every economic development plan is figuring out how to create multipliers in the economy

The “win” to a state from creating and growing new advanced technology companies is the multiplier effect from new jobs, higher-than-average wages (in Oklahoma $73,395, compared to $38,235), and the leverage of public sector concept and seed stage investment capital attracting private equity.

Whether you believe that the state has a role in creating new companies, it’s a fact that capital attracts capital. Oklahoma has traditionally lacked early stage, or startup, funding for new ventures. That’s why the Concept and Seed Capital Funds managed by i2E were created.

In 2009, there was $17 million in venture capital invested here; in 2013 that number was down to $8 million, with the majority of that being in deals in which i2E invested. From 2012 to 2013, the total venture capital investment dollars in the US grew about 7.5 percent. During this same period of time, venture capital invested in Oklahoma declined more than 50 percent.

There is virtually no other private sector venture capital available to Oklahoma entrepreneurs. The Concept and Seed Capital Funds not only help entrepreneurs get started, they prime the pump for follow-on rounds.

From 1999 to 2013, $10,844,477 in Concept Fund investment leveraged $198,439,722 in private capital investment.

The Seed Capital Fund, founded in 2008, during the worst recession of our nation’s history, invested $5.6 million in 15 companies, and achieved a leverage of $22.7 million in co-investment.

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by Scott Meacham
President and CEO of i2E Inc.
Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology....
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The state of Oklahoma ranks 44th in terms of venture capital investment dollars.

SOURCE: PricewaterhouseCoopers LLP/National Venture Capital Association MoneyTree Reports


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