The Texas Legislature has abolished a technology incentive program former Gov. Rick Perry used to distribute $200 million in taxpayer funds to Texas startups — replacing it with a new university fund. That will create a gap in funding for emerging technology funds in the state, say some technology development officials.
A proposal disbanding Rick Perry’s Emerging Technology Fund cleared the Legislature Sunday. Replacing it will be a new governor’s fund to improve research at Texas universities by offering incentives to recruit top academic minds.
Abbott released a statement praising the Legislature and saying the new fund will elevate higher education statewide, ultimately creating “better jobs” for Texans. The state budget includes $40 million for it.
Perry’s fund drew criticism for backing some firms that didn’t create jobs or went bankrupt.
While the abolishment of the fund might appear devastating to the Dallas-Fort Worth area’s burgeoning technology and entrepreneurial community, TECH Fort Worth Executive Director Darlene M. Boudreaux said the changes are not as devastating as they might have been several years ago.
“As the Texas angel community has banded together, they can now fund deals of $2 to $5 million, where five years ago, the ETF was about the only option to get those companies off the ground,” she said in an email.
However, she noted that these changes could impact companies that are at a very early stage of development.
“But angel investors still like for the company to have some proof of concept and the really big impact, I believe, is for the companies even earlier stage than what the angel investors like,” she said. “Those companies that are just getting started may be too early for investors.”
The critical point for some companies probably moving from university discovery to early-stage investable deals, said Boudreaux. “That is one place where the ETF made a difference in Texas, I think, so there will have to be some other mechanism that jumps in to take the place of that particular layer of funding. Otherwise we’ll continue the trend from before — where Texas creates lots of technology, but the companies form and grow elsewhere.” – The Associated Press contributed to this report.