By: Mark Glennon*
If there’s a phrase synonymous with the University of Chicago, it’s surely “free to choose.” That’s the title of an exceptionally influential book and television series from 1980 by Milton Friedman, the former U of C Nobel economist.
But don’t ask if our kids were free to choose whether they should help pay for U of C’s new incubator for entrepreneurs, the Chicago Innovation Exchange. Earlier this month, the State of Illinois announced a $1 million grant to it out of the infamous 2009 Jobs Now program, funded by bonds that we and our kids will be paying. The grant tracks a similar one announced in June to the 1871 incubator in Chicago.
Universities get lots of money one way or another from taxpayers. Most of that may be fine, and $1 million isn’t much. But this is different. This wrecks such a great story. It’s at least symbolically important. The Illinois startup community has flown on its own, making huge contributions to employment, innovation and the economy — with no taxpayer help. The best thing the state has done is stay away.
That’s thanks in large part to the U of C itself. We’ve written here often about all it has done for the startup community — the entrepreneurs it trained and the companies it helped launch. But taxpayer money should go where its needed. There’s plenty of need in Illinois but it’s not in the startup community and not at the U of C, whose endowment just passed $7.5 billion. As with the grant to the 1871 incubator that we criticized in detail here, taxpayer money should have no place.
Coincidentally, an event in Chicago also from earlier this month illustrated another primary reason why the startup sector has exploded in Chicago. The Chicago Venture Summit was a sold-out success. It showcased the region’s progress and drew big name investors from around the country. A subtitle for the conference might have been something like “The power of cooperative capitalism.” A common thread among the companies presenting and the speaker panels was the community spirit that fuels so much of the startup sector. Mentors, contributors, event sponsors and angel investors motivated partially by an instinct to give back have provided enormous amounts of time, skill and money — voluntarily.
The venture summit itself succeeded thanks mostly to the personal effort of J.B. Pritzker, who put enormous amounts of personal time into the conference. He told me over lunch at the conference that his primary hope for it was to put Chicago on the map in a big way to help draw in out-of-state investors. He did it. He did it through his own initiative, with help from others, but not money from taxpayers.
Especially cringe-worthy is that it’s the Jobs Now program tainting that record of independence and personal initiative. That’s a $31 billion program of borrowed money, passed in 2009 with bipartisan support, supposedly to create shovel ready jobs at the depth of the recession. It has turned out to be a PR/pork bonanza this election year for the governor. Take a look list at the recent press releases linked here from the governor’s office and see how many of them are PR opportunities for handouts under that program. Our governor continues to credit the program for creating over 400,000 jobs. Nonsense. That would mean about one of every sixteen of us working in Illinois have that program to thank.
Let the startup sector continue to grow on the foundations that have worked so far, foundations freely chosen by the people in it: initiative and cooperation.
*Mark Glennon is Managing Director of Ninth Street Advisors, an advisory service for emerging companies, and founder of WirePoints. He earlier made venture capital investments for Leo Capital Holdings. He has served on the board of directors of GrubHub and other high growth companies, and is the winner of the Fellows Medal from the Illinois Venture Capital Association.