Cromwell Schmisseur LLC is a national leader in economic development initiatives that support the economic and societal potential of great American innovators. Our passion is empowering entrepreneurial leaders, especially innovators located in regions with developing business ecosystems, by making regional economies more efficient, more resilient and more prosperous.
We believe improving access to human and financial capital is an essential component of a comprehensive economic development agenda for cities, states and nations. Emerging innovation ecosystems are often underserved by one or more sources of innovation capital, but there are smart policies and best practice programs state leaders can utilize to stimulate private engagement in local markets. Importantly, these programs offer elected officials the opportunity to realize "comprehensive returns" in the form of both economic development outcomes and strong investment returns. It's time for states to focus on market-based strategies that promote a positive business environment where companies of all sizes can grow and thrive.
Cromwell Schmisseur has advised public and private sector leaders on the design, implementation or review of large-scale capital formation initiatives. From state supported private investment funds to co-investment funds to fund-of-funds, we've seen what works and what doesn't work in this niche economic development area.
More and more states are realizing the importance of nurturing high-growth potential firms to be the future anchors of regional economies. Small business innovation is fueled by equity financing, so states are seeking new strategies to spur local investment in promising firms and connect with corporate leaders.
The small business investment programs supported by Cromwell Schmisseur have positively impacted thousands of companies in diverse regions across the country. These innovative businesses can diversify and strengthen state economies.
Innovation-based economic development strategies require a long-term commitment, for program outcomes are realized over 10-15 year investment cycles. However, state and local governments have served as laboratories for innovation with various capital formation experiments, and practitioners today can learn from recognized best practices and a principles-based approach to good policy-making. Examples of government-supported programs that align with private market principles include:
InvestMaryland is the largest venture capital initiative in the state's history, designed to plug a financing gap between seed-stage and growth-stage ventures in Maryland. The program raised $84 million from the sale of $100 million of deferred tax credits, with the capital proceeds split between a direct investment fund and fund-of-funds strategy.
Innovate in PA addresses the financing needs of technology-oriented businesses by increasing risk capital accessibility. The program was capitalized by the sale of $100 million of deferred tax credits to yield $85.5 million for investment. The capital is being deployed by the Ben Franklin Technology Partners, the Life Science Greenhouse and through a fund-of funds program.
The State Small Business Credit Initiative (SSBCI) was created by the Small Business Jobs Act of 2010 and administered by the U.S. Department of Treasury. SSBCI was originally funded with $1.5 billion to strengthen state small business financing programs. The American Rescue Plan Act of 2021 reauthorized and expanded SSBCI with $10 billion in funding support, of which $3B is allocated to equity investing.
Finding credible information on best practices for state venture capital initiatives is all too elusive, and state leaders don’t know where to turn for professional guidance. To help state leaders and ecosystem stakeholders start down the right path to an effective, efficient program, we offer the following executive summaries to begin collecting actionable information and asking the right questions:
