Gov. Bill Haslam on Thursday announced a $50 million investment in state and federal funds into strategies he believes will increase the number of jobs in Tennessee.
INCITE is an acronym that stands for innovation, commercialization, investment, technology and entrepreneurship. The plan is part of the overall focus on what Haslam has said is his top priority as governor: job creation.
The bulk of the $50 million — $30 million — will be put into capital “co-investment funds,” which the administration says will complement the state’s existing TNInvestco venture capital fund and Pathway Lending program, and is expected to be in operation by this fall. The total also includes $10 million for the Memphis Research Consortium, a public-private group for idea-sharing that Haslam announced his intention to fund in his original budget presentation in March.
Haslam presented his major jobs initiative on April 20 along with Commissioner of Economic and Community Development Bill Hagerty. Haslam promised at the time there would be more to come on innovation, and that announcement came Thursday in a speech to the Tennessee NEXT Conference, held by the Tennessee Technology Development Corporation at the War Memorial Auditorium in Nashville.
“We have an environment with many of opportunities to improve,” the governor told the audience. “We cannot expect to create high quality jobs, and to move our state’s economy forward relative to other state if we don’t do a better job of capturing innovation created here in Tennessee and moving it into the marketplace.”
Haslam characterized the investment as “early stage and seed capital to help grow innovation businesses in Tennessee.”
“While we have a great economy in Tennessee, unfortunately we lag behind in some key things like patents per citizen created in Tennessee, like the number of engineers and science professionals in Tennessee,” Haslam told reporters after the speech.
“This is all focused on taking our innovative capacity, growing that and then finding ways to bring that to market and grow jobs.”
Haslam said the state needs to do a better job of leveraging some of its current assets in research and development and sees the investments as a way to grow innovative new companies in the state.
Hagerty said Thursday the process for how companies will be designated to benefit from the funding is still under way.
“We’re working with the Treasury Department right now to refine the program,” Hagerty said. “That will determine what qualified investment partners will look like and qualified companies will look like, so the criteria are still under development.”
Part of the idea for INCITE will be to move products “from the research lab to the marketplace” faster, according to an official announcement by the administration.
The plan will include funding a business incubator — which provides assistance in various ways for start-up businesses — in each of the nine economic development regions Haslam has outlined in his overall jobs plan. The regional approach is geared toward capitalizing on the best assets in those specific regions.
In his speech Thursday, Haslam told the audience the state has the potential to make up ground where it lags economically. But he said research institutions in the state are not as closely aligned with the private sector as they need to be. He said less than 3 percent of the research and development in the state is funded by the private sector, which he said is about half the national average.
“We can do better when it comes to commercialization of our own ideas,” he said.
Haslam’s overall jobs plan has been to focus on building upon assets already in the state, as opposed to emphasizing recruitment of outside jobs. The administration has said the vast majority of job growth in Tennessee is in its existing businesses. The effort to focus on the potential in research institutions already in the state follows that same path.
TNInvestco was formed in 2009 under then-Gov. Phil Bredesen. It markets tax credits to venture capital funds with the idea of channeling funding into innovative businesses. Pathway Lending has assisted in loan programs for the state for small businesses and for companies to finance investments in energy-efficient technology.
The Memphis Research Consortium includes the University of Memphis, the UT Health Science Center, St. Jude’s, Memphis BioWorks and FedEx. The concept is to pool and build on strengths in research at those various institutions.