LETTER TO THE EDITOR - Our needs: hard work, community spirit, 'rain'
Creative solutions are needed to make more capital available to people with sound business ideas, who are willing to work hard and efficiently manage their resources.
The formula for solving this investment capital problem is simple - we must take an inventory of our available resources, develop a strategy for distributing those resources, and implement safeguards to make sure business owners are held accountable for their management decisions.
Among Iowa's most valuable resources is a growing number of men and women who have been successful in business, but who no longer have a desire to put in 60-hour work weeks. People in this group possess a wealth of both cash and knowledge, which could make the difference for start-up companies. They are perfect candidates to become what are known as "angel investors."
A rural angel investment network (rain) would pair local investors with start-up companies in the same community where the investors live. Money made available by these angel investors would be matched with federal funds from rural economic development programs. The combination of angel investor resources and federal matching funds would provide a Western Iowa business with enough investment equity to secure financing at a local bank.
The challenge would be to make these public/private partnerships attractive to angel investors. I would suggest an incentive package that includes a 10 percent return on investment guaranteed by the small business owner and a 10 percent federal investment tax credit the first year. I would also provide for a safety net that allowed investors to deduct the full amount of their loan from their federal taxes on an accelerated basis, if the new small business failed.
Critically important to the success of a "rain" program, and to the success of the targeted small businesses, would be accountability. An opportunity would exist for small business owners and angel investors to work together. In some cases, one or more investors could choose to serve on the start-up company's board of directors. As long as any public or angel investor funds were involved, company owners would be expected to provide a monthly profit and loss operating statement. This would ensure private investors and taxpayers that their money was being efficiently managed to achieve optimum results.
When combined with hard work and a sense of community spirit, I am confident a "rain" initiative would grow Western Iowa's economy. Thousands of Iowans would be given the opportunity to realize the American dream and to preserve that dream for their children and grandchildren. If we really want to see our grandchildren come home to grow their families in Iowa, "rain" would definitely help.
Candidate for Congress