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New technology funding idea

October 20, 2012

So far I haven’t ventured into any socioeconomic posts, but this idea has been bugging me and I think it could benefit the technology/manufacturing world and the country.  I may further refine this idea at a later date, but here is what I’ve come up with just putting my ideas down tonight.  I’ve been told that authors that are trying to gain an audience should avoid substance posts, especially ones that could divide people… I’ve never done what I was told anyway, so why start now.

Here is an idea, instead of giving government money directly to companies that may or may not fail in their venture give tax deductions to qualified companies and the investors.
That is; instead of giving 1 million dollars to a company in the green industry, offer the company a tax deduction for qualified investments within a specific time frame. Also allow investors to receive a deduction for those investments. Both of these are predicated on success though so you cant write off your losses as an extra loss item on your taxes.
This way tax money isn’t used, tax money also won’t be wasted overseeing the company, or administering the grant etc.. It also stimulates the industry, and the best part… It fosters competition, instead of just asking for money from the government the companies must prove to investors that they are worth the risk.
This plays to the fact that investors are greedy as all hell, they won’t invest in something that isn’t going to work, or at least not in something they think won’t work.
This lets the market pick the winners and losers, the government still gets the benefits of taxes on profits from the winners, and doesn’t suffer losses through granting money to the losers.

Before you counter and say “but the government needs to support new technology to help keep our dominance and help the economy” I have this to say.
My plan accounts for that, if a company can’t prove their product or idea will benefit the economy or break technological grounds, or earn a profit odds are they will have been in the loser category and would have just eaten government funds.
Venture capitalists take calculated risks if they invest money it’s because they think it will work. If they don’t it’s because they think it won’t.
Could some companies fall through the cracks? Yes, but they can alwasye restructure their company or sell their idea to a competitor and it could get made that way.
Heck even the companies that do fail only absorb private funds and not government money.

Another counter argument you might have, is “companies can already seek private investors.”. This is true, I’m proposing a new model of investing that replaces government grants for ground breaking technology. Green tech, new computer systems etc… Old tech or established companies wouldn’t qualify for this new category. Big Oil wouldn’t be able to qualify since they aren’t developing enough new ground breaking tech. Even the car companies wouldn’t be able to get in on this unless it’s only for green cars or high yield batteries. This new investment model would be for new companies working on new tech, or established companies that only working on new tech.

This is a win win situation that gets new ground breaking technology funded, and relieves the burden on the government to fund ground breaking technology.

Rant over…

 

From → What I think

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