A Note From The Chairman

(editor's note: Jack Harding sends this thought.  A postscript to his exchange, at our symposium, with Cairn Cross)

Better Late Than Never

I failed to support fellow Vermont Tiger Symposium panelist, Cairn Cross of Fresh Track Ventures, on one key point.  As he was painting his “Mr. Sunshine” perspective of new job creation in Vermont he described several fine initiatives that encourage new entrepreneurs to take the plunge and how his firm is stewarding them towards revenue and profitability.  This is a fact.  It is also a fact counter-pointed by Art Woolf that there is no net new job creation in our state.  The conclusion that was left with the audience is that there is no measurable success within the local venture world and this is not the case.

Both guys had it right.  There are no net new jobs in Vermont but Cairn’s point should be have been seen as a  measure of the critical transition to Dave Audretsch’s Entrepreneurial Society.  This is the chasm crossing phenomena that accelerates the growth of clean job opportunities.  Said differently and regardless of the job totals, the anatomy of those totals matter a lot…perhaps more than the short term total. Oversimplifying, if we lose a thousand jobs tomorrow but 100 of those folks become entrepreneurs we will have, by Cairn’s math, 3000 jobs in 3-4 years.  This is not to say losing any job in any given household is acceptable.  I am simply making the point that Art can be right about the job count and Cairn get be equally right and excited about the tiny but very real progress he is observing in the start-up community.

To cast a cloud or two of my own it is a sorry metric that Vermont has exactly one venture capital firm; and a tiny one at that. It tells me there are too few people proffering too few ideas.  Within a state that has and is surrounded by a couple dozen excellent colleges and universities, including some of the nation’s best, there should be more folks with an idea worthy of risk capital.  Not to hope for any more competition for Cairn’s Fresh Tracks (and thank goodness we have them) I look forward to the day when Vermont supports many more firms funding that many more ideas.  It’s a must if we are take our place among those states that have supported the infrastructure, policies and, ultimately, culture required to enjoy the benefits of a knowledge based economy.

Jack Harding

Comments

[Cairn Cross]

Jack as you know there is much "cooperation" in the venture world (we call it co-investing)and so we would welcome more venture efforts in the state because it would benefit FreshTracks and our companies in the long run. One thing I forgot to mention last week (there were so many good things I could not get to all of them!) is that recently UVM started something called UVM Ventures which is not a venture fund but a grant making fund that gives money to commercialization efforts at UVM. Basically, UVM Ventures will hire a business person to work with UVM professors or researchers to build a business plan around a new idea. There are about a half dozen efforts underway at present.

[David Usher]

Jack,

Thanks for articulating more about the 'creative destruction' implications of VT entrepreneurs with good ideas bringing good jobs on line. Thanks also for the great day last Friday.

Vermont has more than one VC group. I know of at least two more in addition to Fresh Tracks.

Dave Usher

[James Ehlers]

As an entrepreneur not interested in VC money, I can tell you we have little reason to invest here right now. If the business plan does not involve the Vermont Brand, there is little to entice one to invest here as opposed to another state. Insurance costs are ridiculous, property taxes an explosive football, the political climate openly and indirectly dismissive of businessmen, the utility situation uncertain, and the trend for each: negative. Most of us who remain in business continue to do so expecting politicians will soon realize they cannot regulate us into prosperity. It is the entrepreneur who creates the wealth they seek to control.

If the economic situation were as hopeful as we would like to think it could be, the indicators would align. The state's crumbling infrastructure is proof many a legislator does not understand investment. Unfortunately, despite the Vermont Brand, our roads and bridges crumble just as if they were paved with ordinary asphalt.

Perhaps the government-planned Green Economy does not need skilled youth, parking lots plowed, stable sources of electricity nor employees insured. I look forward to reviewing that business plan and meeting the investors who sign onto it--uncoerced.

[Cairn Cross]

Dave, love to know who those two other firms are, because we are unaware of any actual funded partnership focusing on venture capital primarily in Vermont. All we know of is Vermont Capital Partners/Brook Ventures which is a mezzanine debt fund and Worth Mountain Capital partners which is a buyout group that raises funds on a deal by deal basis to purchase control positions in mature companies. Green Mountain Partners in Quechee is also buyout fund that does the occasional Vermont buyout deal but again these are late stage buyout deals. I'd like to know who the other firms are because we could certainly invite them to participate with us in either investing activities or various events.

[Jack Harding]

James,

Thanks for the thoughtful comment summarizing the enviironment for Vermont busines owners. Your first hand perspective is compelling and terrifying to me.

An important theme in your comments for the poliiticians is, "Just do your job and we'll be happy." It is true that not only are our leaders not helping they are promulgating or failing to resist outright negative policies.

We need your voice at VT. Please help us to reinforce your points that infrastructure and reasonable public policy are esential to have clean growth and prosperity for the average Vermonter.

[James Ehlers]

Dear Jack,
I watch as politicians accuse some business people and other politicians of overstating issues associated with the economy for political reasons. Only a partisan would make such an allegation. It does not serve our interests--the interest of the employer--in the least to create problems where none would exist otherwise. We are sensitive to the issues, however, because we see the effects of government policy and regulation, in many cases, long before the legislators who created the situations do. We are particularly keen to note expenses when we know we will not have the ability to recoup these costs through the sale of our products in the marketplace. We rarely need to study the issue--We live it.

Here are some of those issue areas where government is having a direct and indirect impact, in no particular order:

-Land costs
-Workmen's Comp
-Sales tax
-Electricity
-Natural gas
-Health insurance
-Healthcare
-Roads
-Internet connectivity
-Creation of an atmosphere through the above that is not attractive to the young, creative class

Regardless of where one stands on the above from a political ideology standpoint, they all have undeniable and demonstrable costs associated with them.

When the largest employer in the state is the government, I think the problem is self-evident given the government cannot create the wealth it intends to redistribute.

I understand there are many who do not currently see government on any level as a problem. It is understandable then that these people could not possibly be part of the solution.

I appreciate, as well, that there exists intellectual business opportunities for those in a position to cherry-pick them. Those alone, however, do not create a stable, well-rounded economy. They generate buzz and hype for the politicians who support them, and perhaps profits for investors, but they do little in terms of providing opportunities all across the spectrum of human abilities and services necessary to support the range of businesses necessary for a healthy community. We are, however, by acceding more and more power to the government, necessitating greater dependence on the part of the Vermonter. This in and of itself explains why there has been essentially no net new job growth in this state since 2000. Growth springs from the independent citizen, not the dependent.