Lawmakers and Gov. Eric Holcomb reached a deal on a $34 billion, two-year spending plan that increases education funding and boosts spending on services for children who are abused or neglected.
The vote on the agreement came shortly before IBJ’s deadline on April 24 and the budget is some 250 pages. So we want to do a little more reading before we endorse the entire plan.
But we’re pleased to see that lawmakers fully funded the 21st Century Research and Technology Fund, better known these days as the 21 Fund, at $30 million per year.
That’s the amount Holcomb had requested, and it was the amount the House put in its budget plan. But the Senate budget cut the line item to $22 million per year, meaning the funding was part of last-minute negotiations on the budget.
We think lawmakers made the right call by fully funding the program.
The 21 Fund’s purpose has meandered a bit since it was created in 1999, but it always has been dedicated in some way to encouraging research, technology and innovation. And that investment is key to maintaining the state’s efforts to create a vibrant tech community.
Since 2010, the 21 Fund has invested $86.7 million in 306 Indiana startups, securing nearly $600 million in capital from other sources. A 2016 Ball State University study found that investments from the fund have had a return on investment for the state of more than 20%, based on the amount of private funds leveraged through the deals.
Today, the fund is used both to provide seed funding to early-stage startups and to invest in fledgling companies’ crucial scale-up phase. That matters in a state that struggles to attract venture capital.
And the Indiana Economic Development Corp. also uses 21 Fund money to support industry-led, public-private partnerships aimed at research and development, in addition to programs to keep talent in the state. For example, the state last year used $3 million from the 21 Fund to leverage $54 million in federal and private funds for microelectronics research at Purdue University and the University of Notre Dame
It’s easy to see why it might have been tempting to cut funding for the program. Two years ago, Holcomb and lawmakers created a $250 million venture fund meant to steer money into Indiana companies, a move that could appear to be duplicative.
But the Next Level Fund—managed by Chicago-based 50 South Capital Advisors LLC—doesn’t directly choose Indiana companies for investment. It puts money into other venture funds that it believes will invest in Indiana firms.
Roughly two-thirds of the 21 Fund is administered by Elevate Ventures, a not-for-profit dedicated entirely to fostering Indiana startups, not only with money but also with guidance through the complicated business of entrepreneurship.
For Indiana’s tech and startup community to thrive, Indiana needs both the 21 Fund and the Next Level Fund. Kudos to lawmakers for getting that right.•
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