The Legislature's Joint Subcommittee on Economic Development voted Thursday to recommend a bill that would provide up to $250,000 for technology-based startups in Wyoming.
The funds would be used for products and ideas that have the "possibility" of returning an economic benefit to Wyoming's economy.
But the state matching funds would only be available to those who have had their projects vetted and accepted by the federal Small Business Innovation Research program.
The competitive program provides federal research funds to entrepreneurs who have early stage ideas that may be too risky for private investors.
It awards up to $150,000 in "phase I funding" to establish the technical merit, feasibility and commercial potential of a proposal. Those recipients are then eligible for "phase II funding," worth up to $1 million, to continue that work.
The state's proposal would add on to those federal awards by providing up to $100,000 for phase I recipients and up to $250,000 for phase II recipients.
This would be funded, at least initially, by transferring funds from the state's defunct Science, Technology and Energy Authorization account.
The Wyoming Business Council program was repealed years ago. But there remains about $600,000 in the account.
Ben Avery, director of the council's business and industry division, said officials have been looking for opportunities to spend that money elsewhere.
"It would be the opinion of the Business Council that this would be a good use of the stale STEA funds that are just sitting there not being used," he said.
He said this type of startup money is crucial for small companies or solo innovators who want to advance their idea.
"Entrepreneurs are generally starting a business, and they don't have cash flow," Avery said. "They really don't need and should not enter into a debt instrument that could become devastating to the advancement of their company."
Bill Gern, vice president for research and economic development with the University of Wyoming, agreed that these types of startup awards are one of the most useful tools for growing a new business.
"The moment you decide to make a business, that's when you decide to start spending money," he said. "You can enter into these very strong burn rates as a company, and that just really uses up your capital."
The proposed legislation would require recipients of the state funds to report to the Business Council on the jobs, taxable assets, revenues and other benefits created by their company.
It also would require the state funds to be paid back if the product or idea is commercialized and the entity doesn't maintain a "nexus" with Wyoming for the next 10 years.
The proposal was considered but narrowly rejected during this year's legislative session.
It passed the Senate, but was defeated in the House of Representatives on a 26-33 vote.
During debate on the bill, some lawmakers argued there were ways other than using state funds for innovators to find money for their startup work.
"This is what banks are for," said Rep. Marti Halverson, R-Etna, during the final floor debate on the bill. "Banks lend these startups money, and they have to be paid back whether the product is commercialized or not and whether they leave the state or not."
But Rep. Tom Lockhart, R-Casper, who is a member of the Joint Subcommittee on Economic Development, said the proposal could have numerous benefits to the state. In addition to growing innovative businesses, he said this could help incentivize young professionals to stay in Wyoming.
The proposal will now be forwarded to the Legislature's Joint Minerals, Business and Economic Development Interim Committee. That group will decide whether to sponsor the legislation for the 2016 session that begins in February.
©2015 Wyoming Tribune-Eagle (Cheyenne, Wyo.); Distributed by Tribune Content Agency, LLC.
