New Investment Program Touted to Get Startups Through The Valley of Death
CLAYTON, MO–(KMOX)–The Ritz Carlton with its crystal chandeliers and oil paintings of Victorian ladies imparted a feeling of prosperity on the crowd gathered for the county’s annual economic luncheon, despite the slow recovery with job growth as meager as a shower towel at Motel Six.
“With the closure of the two Chrysler plants and the closure of the Ford Plant in Hazelwood, we had a bigger hole to climb out of,” said Denny Coleman, President and CEO of the St. Louis County Economic Council, “We lost probably 60,000 jobs overall.”
Coleman was commenting on the question of where are we? Where is the region now — in light of last month’s Federal Reserve Bank of St. Louis report showing the region is lagging behind the nation on several economic indicators?
The theme of the gathering was that start up companies, entrepreneurs have the potential to lift the region, if they can get cash to survive the fragile phase when even a good idea can die for lack of money.
“To help fund what is called The Valley of Death, because high-growth companies burn through the family, and friend’s and their own money very early on, but then they’re not yet ready for the venture capitalists or traditional banking,” Coleman said.
Jumpstart Program on the menu:
Speakers unveiled a new effort, modelled on a program started in Cleveland, in which private sector and foundation money is raised to help start up companies get to a point where they are self-sustaining.
The federal Jumpstart Our Business Startups, or JOBS, Act was signed into law last week, allowing investors who are “non-accredited” to plow money into private companies that meet a thresh hold of income and net worth.
The Securities and Exchange Commission is still working on the rules for the program, which is scheduled to debut months from now.
Critics warn it could be ripe for scams, tempting unsophisticated investors to risk their savings on projects they don’t fully understand. But supporters say it will work.
In 2010, more than 60 tech companies in Cleveland got seed money from an array of investors, according to Ray Leach, the CEO of Jumpstart. Another 400 tech firms there filled out applications to get funding through the program.
The program was being served from the podium at the St. Louis County economic luncheon to a crowd dining on uncertainty.
Joe Reagan , President and CEO of the Regional Chamber and Growth Association, says “uncertainty is the watchword” he keeps hearing from business leaders, waiting on the sidelines to see what might happen in Greece, Spain or the Middle East.
“We’re in an era of uncertainty,” Reagan said, “and we’re going to have to embrace that uncertainty and move forward, and start to make capital investments and hiring decisions, because I don’t think that uncertainty is going to dissipate over a year.”
Reagan was asked about the nostalgia longtime St. Louisans feel for the corporate climate when workers could reasonably expect to find a job for life with one company.
“Lifelong jobs are something that no longer exist, not only here, but anywhere in the world anymore,” Reagan said, “There is no such thing as lifelong employment anymore. And It’s because we’re in this global, knowledge economy, where each and every one of us has to learn to see ourselves as an entrepreneur.”
Reagan went on to predict that today’s college students will graduate to an economy where they will not only have four or five jobs — but “four or five careers.”