JACKSON — The Mississippi Development Authority wants to start up a new venture capital nonprofit to handle $52 million in COVID funds coming to Mississippi. A bill is pending in the Legislature to do just that.
Hmmm.
In 1994, the Legislature undertook a nearly identical venture. It put $20 million into Magnolia Venture Capital Corp., a private nonprofit under the control of the Mississippi Department of Economic and Community Development (MDA’s predecessor). The venture failed, did not start up any new ventures, and was investigated for extravagant expenditures and corrupt activities.
“We ended up with a scandal before,” said state Sen. David Blount when the bill came through the Senate.
“If you look at history, any time government gets involved in private business affairs like this, you end up with misspending, strong arming, cronyism and corruption,” said state Sen. Chris McDaniel.
As suggested by Mississippi Today, when Jackson Democrat Blount and Laurel Republican McDaniel align, you know something unusual is in the woodpile.
The Greenwood Commonwealth questioned MDA’s move, recommending the Legislature utilize existing, experienced venture capital organizations such as Innovate Mississippi to manage the money rather than a new startup controlled by MDA. “These organizations have the proper vetting mechanisms and an excellent historic track record,” the paper stated. Using them “would be fruitful. Creating a new state venture capital agency from scratch would not.”
Indeed, MDA’s push to start a new agency seems strange. Innovate Mississippi already coordinates its activities with MDA. It was founded in the late 1990s by John Palmer and other successful business leaders as a public/private partnership to spur technology and other innovative startups. A review by Site Selection Magazine stated, “In the two decades that Innovate Mississippi has been in business, more than 1,500 startups have been connected to over $181 million in seed and venture capital, resulting in the creation of thousands of new jobs.”
This may be something from the woodpile — MDA is a state agency under the direct control of the governor, while Innovate Mississippi is under the control of an experienced private sector board.
The Senate passed a bill to utilize the federal money but excluded the language MDA wants to set up a new venture capital nonprofit. The bill went to the House, where the Ways and Means Committee put in MDA’s requested language. As this was written early Friday, the bill was awaiting action by the full House.
Perhaps the members of the House Ways and Means Committee weren’t paying attention. Mississippi has been down this road before. Mississippi has run off this road, through the ditch and into the gully before. “Venture capital is by definition making risky investments,” noted Sen. Blount. “That’s not our job.”
The Commonwealth’s “better solution” to stick with proven venture capital organizations such as Innovate Mississippi is on target. Hopefully, the Legislature will not shoot itself in the foot again and turn $52 million over to a new entity under the control of the governor and his political appointee at MDA.
I will instruct you and teach you in the way you should go; I will counsel you with my eye upon you. — Psalm 32:8
- Bill Crawford, of Jackson, is a Republican former state lawmaker.
