A number of organizations in our region are trying hard to improve the lot of small business as well as stimulate creativity and innovation. With that goes the hope of attracting others to come and bring their ideas.
I admire their perseverance.
They keep going, encouraging would-be entrepreneurs and putting one in touch with another to share ideas, but for little gain.
There is a missing link in Savannah: investment capital.
I am disappointed that the turnover at SEDA has slowed and maybe pigeon-holed the planned SEDA Ventures, a venture capital fund to focus on support for great ideas in our coastal region.
SEDA ignores this need, to our detriment.
I cannot overemphasize the importance of risk capital and its potential for our region.
Investment in start-ups was one of the pillars of the Stanford Research Institute report on Savannah this past year.
Here is their finding: “SRI’s study provides data that shows that the Savannah region is likely unable to support the formation of companies based on proprietary technologies that require additional investment and development to reach the market place.”
The report goes on to say “the region boasts many start-up companies that are self-financed,” leaving the reader to draw his or her own conclusion about the likelihood that those businesses might qualify for additional sources of capital.
Let me add the caveat that the percentage of ideas that get funded by angel investors or venture capitalists can be exceedingly low, often less than 1 percent. This is not a handout, nor is it intended to replace traditional banking sources for existing businesses. In Savannah’s case, it would be mostly for start-ups or seed money for new ideas that show unique promise.
When SEDA is serious about support for recruiting new start-ups, it will pay close attention to the success of Kansas City’s Google Fiber ultrafast Internet installation, (“Tech’s New Frontier: Silicon Prairie,” New York Times, Nov. 21).
The recent and welcome financial support by SEDA for making our excellent airport more competitive is an example of where small investments have the potential to pay off big for the coastal region. Do it again, SEDA: How about jumpstarting an effort to bring in high-speed Internet infrastructure? I cannot imagine a better magnet to draw technological entrepreneurial efforts.
In a Google competition a few years ago, Chattanooga won a contest to have the company install a one-gigabyte-per-second fiber optic network in that city. It is already paying dividends. Otis Johnson, Savannah’s mayor at the time, was, by his own words, only vaguely aware of this opportunity.
There is a fellow in Chattanooga who picks up my column through savannahnow.com. He is fond of waving that success in my face and what it has done for his city, its innovative and technologically competitive ascendancy and the resulting new capital that has found its way there.
I don’t blame him. I’d do the same thing. If I could.
A recent Pitney Bowes analysis of U.S. Census Bureau projections for growth over the period from 2012-17 listed Savannah among the top 50 of 384 metropolitan areas of at least 100,000 households (6,700 households, 5 percent growth rate). One local projection suggests most of our growth will come from retiring baby boomers.
That’s a help. Retirees build and buy homes and otherwise contribute significantly to the local economy. On the other hand, I would have liked projections of young, skilled and educated people well represented in that mix, followed by new capital. Instead, I fear an out-migration of this important demographic in search of new opportunities.
The two metro areas at the top of the Pitney Bowes list are well known tech darlings: Provo-Orem, Utah, and Austin, Texas. It will take at a minimum, years, an investment of both financial and intellectual capital and a competitive, innovative spirit to gain us that exemplary growth.
It is not to say there is not private equity in the Savannah area, but being domiciled here and focusing on investments here are two different things. It is natural for those who put their own funds at risk to seek the best opportunities, regardless of where they occur. Our goal must be to have a mechanism that will keep those needed investments here at home.
Russ Wigh is a professor of business. Email him at rdwigh@bellsouth.net.