What Mills means | How a Karen Mills Small Business Administration might help your company
Karen Mills has some thoughts on growing regional economies. For the past several years, she’s advocated for the economic benefit of regional industry and innovation clusters. Mills helped get a $15 million U.S. Department of Labor WIRED grant for the Maine boat building industry and worked with Gov. John Baldacci to implement recommendations from the Brookings Institution report, “Charting Maine’s Future.” While in Maine, she co-authored a Brookings report in April 2008 titled “Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies.” Mills also worked with CEI Community Ventures — a New Markets Venture Capital fund that I manage for Coastal Enterprises — and the Small Enterprise Growth Fund to develop a specialty food industry cluster in Maine.
In December, President Obama nominated Mills — who lives in Brunswick with her husband Barry Mills, the president of Bowdoin College — as director of the U.S. Small Business Administration, a position some (including Sen. Olympia Snowe) would like added to the Cabinet. So, given Mills’s background and what she’s been up to in Maine, what might we look forward to in a Mills SBA should her nomination be confirmed?
As backdrop, the $789 billion stimulus package pending at press time and the federal government’s economic policy involve a renewed focus on urban markets, industry and innovation clusters and underserved people like women and minorities. And with the Obama administration clearly listening to the good folks at Washington D.C.’s Brookings Institute, we may see a federal economic development plan like that outlined by Brookings’ Metropolitan Policy Director Bruce Katz and Harvard Business School’s Michael Porter. Porter has written extensively on competitive strategy and cluster development and that strategy would likely be implemented across agencies and would stress financing and resources that support growth in select urban and rural regions and in select sectors. Katz and Porter assert that as urban economies go, so goes the nation. They say, in fact, that 75% of our GDP comes from urban city markets, or, as Katz calls them, “the engine of our prosperity.”
Mills is likely to focus on urban markets and industry clusters, too. Urban markets enable the administration to meet its stated objectives with respect to underserved peopled located in underserved regions. Through SBA and other agencies, urban markets might have more access to capital through loans, equity or grants, and could more easily tap business resources like education and consulting. According to Mills’s own research, clusters should be funded by grants and supported by centers providing information on related businesses and opportunities. These activities ought to be coordinated across agencies, according to Mills and others, so government can implement policy in a unified manner.
Focused funding
SBA’s toolkit currently includes a mix of financing (loans, equity) and business resources (such as Small Business Development Centers and SCORE, the Service Corps of Retired Executives). Over the past eight years, SBA’s budget has been dramatically reduced. Given the difficulty of creating new programs during a recession, it seems Mills should look to simply reinstate SBA’s program funding with a strategic urban and cluster emphasis. Indeed, the SBA has a rich history supporting specialty funds such as the New Markets Venture Capital program I currently manage. SBA grant funds might support industry associations, cluster events and educational endeavors. Cluster information centers would be the repository of all things cluster — such as research and reports, company databases, cluster maps and economic development research.
So, why should all this matter to readers interested in venture capital and small business growth issues? Here are a few reasons:
Equity: The early-stage venture “capital gap” has not gotten any better over the past two quarters. If Mills can revive SBA’s equity programs, new liquidity can support growth ventures. For my part, I’m game to pursue such funds if the SBA is game to provide the capital and program. That could mean additional capital and resources for growth companies located in underserved states like Maine.
Grants: Technical and operational assistance funds are low-cost or free services to small-growth business and to the entities (for-profit, nonprofit, government) that serve them. In short, if you’re in a target cluster or region, resources are likely headed your way if Mills is confirmed.
Clusters/sector support: If you’re starting a business or are in a business that is one of a given region’s target clusters, you’ll not only find local resources (Maine Technology Institute’s Cluster Development Award) but likely federal resources (equity, grants or tax credits) to help you on your way. Focus on growth sectors and you’re likely to maximize your success in the economy of today and tomorrow.
Michael Gurau, managing general partner of Clear Venture Partners in Portland, can be reached at mg@clearvcs.com.
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