Tuesday, October 16 , 2018, 11:03 am | Fair 71º

 
 
 
 

Gino DiCaro: 8 Reasons to Leverage California’s Venture Capital with a Competitive Environment

The world is too mobile and competitive to count on our advantage of location

California receives a majority of American venture capital. Always has, hopefully always will. Our state produces brilliant creative minds and ideas because of its university power and its sheer size of 35 million people. This unique outcome alone does not, however, equate, by default, to the meaningful job growth necessary for our many workers who are unemployed and under-employed (a term becoming all too common for the folks forced to take any job they can find).

We must leverage our built-in venture capital advantage to ensure that emerging green and other products are actually produced here. California’s wealth will be multiplied once VC cash gets beyond the investment board room offices and into the bank accounts of our very own hard-working, middle-class families.

The Los Angeles Times recently published an article about venture capital growth in California and the notion that it does, and will, open the floodgates to new green jobs. The state’s VC numbers often are used to support bold, California-only mandates and policies, without regard for the state’s competitive disadvantage. Now the impressive amount of VC investment is being used to justify opposition to Proposition 23 — the ballot initiative to suspend AB 32 until our economy is in better shape and unemployment numbers are reduced.

I offer eight recent independent examples and statistics that refute the notion that VC and seminal green projects automatically produce the type of job growth this state needs for its economic recovery.

» Silicon Valley-based Solexant solar systems raised $41.5 million in venture capital but uses a $25 million loan and Oregon tax credits to build a 200-employee manufacturing facility in Oregon, according to the Daily Finance.

» California-based Fisker automotive purchases a manufacturing facility in Delaware to produce its $90,000 and $40,000 plug-in hybrids, Wired reported. (Why didn’t these guys get the same deal Tesla got?)

» Orange County-based Amonix has a big list of VC investors but purchases a 214,000-square-foot facility in Nevada for 300 workers to manufacture its solar power systems, according to the Las Vegas Review-Journal.

» Oceanside-based biotech firm International Stem Cell Corp. is using venture capital in India to locate facilities over there, the San Diego Business Journal reported.

» Richmond-based Vetrazzo, a recycled-glass countertop manufacturer, receives $2 million in venture capital, but only if it moves production where it can compete, according to the San Francisco Business Times.

» Movie mogul and Summerland resident Kevin Costner has spent the past 15 years developing an oil-cleaning centrifuge machine. It’s being made in Carson City, Nev.

» California’s overall portion of new and expanded U.S. manufacturing facilities was 1.3 percent over the last five years, while nearly half of the country’s venture capital continues to funnel to the state. Click here for a related chart.

» Finally, there are ample reminders of companies that went with more competitive manufacturing locations that were mentioned in our “Why Not California” series. Click here for a related chart.

Venture capital might have translated into regional job growth in times long past, but now the world is too mobile, too competitive, too global. California must find a way to compete so we can leverage our VC dollars, creative minds and ideas into broad wealth for all working families.

— Gino DiCaro is vice president of communications at the California Manufacturers & Technology Association and writes the CMTA’s MPowered blog.

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