ATLANTA – Georgia’s state-financed venture capital fund has been left with only operating money for the foreseeable future, a victim of the deep budget cuts the General Assembly approved last month.
Invest Georgia, which received allocations of $10 million in each of the last four fiscal years, is being hit with a $9.75 million reduction for fiscal 2021, which began July 1. The cut came as lawmakers were casting a wide net to find $2.2 billion in spending reductions to help offset the fiscal impact of the coronavirus pandemic.
The VC fund has enough leftover capital from fiscal 2020 to continue investing in Georgia-based growth and early-stage companies through the end of this calendar year, Knox Massey, Invest Georgia’s executive director, said this week. But the fund’s future beyond that is uncertain.
“The cut was a surprise, and it’s disappointing,” Massey said. “But there was a lot of pressure on the state to generate revenue wherever they could.”
Invest Georgia was created in 2013 as a priority initiative of then-Lt. Gov. Casey Cagle.
Since then, it has invested in 10 private-equity funds, most recently in Atlanta’s early-stage VC firm Tech Square Ventures. Invest Georgia partnered with Cox Enterprises and Georgia-Pacific in a $25 million investment announced early this month.
“A huge portion of our funds go to Georgia companies, which create jobs,” Massey said. “We consider ourselves part of the solution.”
Cagle’s successor as lieutenant governor, Geoff Duncan, who formed a task force of political, business and academic leaders in January to look for ideas on how to make Georgia a technology center, believes Invest Georgia has an important role to play in achieving that goal, spokeswoman Macy McFall said.
“The lieutenant governor has always been a supporter of Invest Georgia and the work they do to fund innovation and entrepreneurship across our state,” she said. “It is [his] sincere hope that the economic outlook for our state quickly improves and that adjustments can be made in January to restore some of the funding in this area, and he hopes that Invest Georgia will be among the far-reaching public-private partnerships that will take us towards the goal of being the best technology state on the East Coast.”