Missouri gets $26.9 million to help boost small businesses
This article first appeared in the St. Louis Beacon, March 22, 2011 - Whether they are trying to help patients cope with the effects of atrial fibrillation or helping shoppers find a pack of batteries at Schnucks, Missouri entrepreneurs may get help from $26.9 million in federal aid to turn their ideas into money.
Gov. Jay Nixon announced Tuesday that the state has received the money from Washington through the State Small Business Credit Initiative - money that he hopes Missouri can leverage tenfold to attract private investment that would help nurture entrepreneurs and create jobs.
After meeting with some of those entrepreneurs at the Center for Emerging Technologies, a business incubator at 4041 Forest Park Parkway in St. Louis, Nixon noted that while it's great to make announcements about large-scale additions to the state's recovering job base, small businesses are a vital component in making sure Missouri's turnaround continues.
"Big wins are just one piece of the puzzle when you are talking about economic growth," Nixon told a news conference.
The $26.9 million - the maximum amount available to Missouri under the program - will be divided into two efforts.
The high-tech IDEA Seed and Venture Capital funds will provide $16.9 million in loans to help emerging businesses move through four stages of growth - pre-seed capital financing, seed capital financing, venture capital financing and expansion debt.
The plan also earmarks $10 million for the Grow Missouri Loan Participation Fund for businesses in lower-tech industrial, commercial, agricultural and recreational businesses with fewer than 500 employees.
The state has to lend out the money within two years, Nixon said. The application period for Missouri businesses begins April 8.
Nixon said that all states had the opportunity to apply for $1.5 billion in funds available nationwide. He said Missouri's portion, which was announced in Washington by Treasury Secretary Timothy Geithner, shows that "we are prepared to move in this state" to explore every possible avenue to create jobs.
He noted that after big job losses in 2008 and 2009, Missouri turned the corner last year and the improvement has continued so far in 2011.
One key to maintaining that momentum, he said, will be working with people who are willing to take a risk and combine their good ideas with good business models. The new money, he said, can help fill the gap where too many startups are frustrated because the seed money they need to get off the ground isn't available.
Before the news conference, he met with people from two such endeavors - CardiaLen, which is helping develop new technology to deal with atrial fibrillation, and aisle411, which is designed to make your trip around the grocery or hardware store a lot less frustrating.
Robert J. Calcaterra, president and CEO of CardiaLen, showed Nixon a device that fit in the palm of his hand and is designed to be implanted in patients and could provide new, pain-free treatment for an ailment that affects 3.5 million Americans and millions more worldwide.
Now, he said, atrial fibrillation is treated with drugs, paddles or invasive surgery. Currently, the device is being tested in dogs; Calcaterra said human trials are scheduled to begin in Europe late this year or early next year.
CardiaLen began in 2009, he said. So far it has been able to raise $1 million locally and $3 million total, with the rest coming from a venture capital firm in Boston.
An innovation that more people would be able to relate to directly comes from aisle411, which has a free app for smart phones and other devices that can direct you what you need to find in a large store.
Chief operating officer Matthew Kulig showed Nixon how it works. He asked his tablet device to show him where to find batteries in the Schnucks store on Arsenal. Up popped directions and a map. If you give it a whole list, the app can draw up the best route for you, so you're not wandering aimlessly through a store that may be unfamiliar.
Kulig said studies show that stores may lose up to 24 percent of potential revenue from shoppers who might leave rather than take the time to ask personnel where certain items are located. He said research also shows people would rather use their smart phones to guide them than humans.
So far, he said, the aisle411 application is in more than 1,000 stores nationwide and projections say that total could grow to as much as 15,000 by the end of the year. Though the app is free, products pay to advertise, and shoppers can also benefit from coupons and other information.
Nixon said that such companies are the key to improving Missouri's economy.
"Being able to grow businesses within your state is the most efficient economic model," he said.
Asked whether, theoretically, it is government's role to help businesses in this way and in essence pick favorites, Nixon replied:
"Being governor of a state is not a theoretical job. It's a very practical job. The time for theory has passed. The time for practicality is here."