A state fund that provides financial and technical aid to spur the growth of high-tech firms has helped to create at least 600 new Iowa jobs over the past five years and generated $2.1 million in tax revenue from these firms in 2012 alone, a new report shows.
The “Demonstration Fund” was established in 2007 to help Iowa companies with a clear potential to develop commercial products and services, state officials said. It supports commercialization activities by small-and medium-sized firms in advanced manufacturing, biosciences and information technology industries.
The primary purpose of the fund is to help businesses reach a position where they are able to attract later-stage private-sector investments.
Over the past five years, the fund awarded $13 million to 101 companies. . Thirteen firms received two awards, nine have closed and four declined the investment.
A survey of 79 companies that received $8.7 million documented the 600 jobs and $2.1 million annual tax revenue, according to a study by Philadelphia-based Econsult Solutions, Inc.
“That is an excellent investment and I will take it any day of the week,” said Chris Nelson, president and chief executive of Kemin Industries and a board member of the Iowa Innovation Corp., a non-profit group created by the business community to implement statewide innovation strategies.
Overall, the 79 survey respondents reported annual revenue growth of about $87 million, the report said. The increase in employment and economic activity came in a wide range of industries, including construction machinery and industrial instruments manufacturing, medical device manufacturing, food products manufacturing, animal vaccines, anti-cancer therapeutics, computer system design services, and software development.
The study was released by Gov. Terry Branstad on Monday at his weekly news conference, where the governor and state economic development director Debi Durham praised the fund as an effective tool of economic development. The fund was started under Democratic Gov. Chet Culver’s administration, but Branstad said his administration has been “building upon what was in place and trying to perfect it.”
“It is essential that we have tools in place to help Iowa’s high-growth, innovation-based companies succeed in our state,” Branstad told reporters. “The Demo Fund is one way we have to do this, and because of this report, we know quantifiably that the state is seeing a return on that investment.”
Nelson said the success of the demonstration fund was the result of dedicated and motivated industry leaders statewide who had a vision to expand Iowa’s economy by investing in and mentoring emerging tech-based firms.
“Those of us involved with the applicants soon learned that the real value was the mentoring with the dollars being a close second,” Nelson added.
Jeff Fleenor, president of Fleenor Manufacturing of Pella, said the Demonstration Fund was a big help to his firm, which looks to solve unique problems. The Demonstration Fund has helped by “kick-starting” the commercialization phase when his company has developed a new product, he added.