I confess, I’m one of the few Boston VCs who danced a jig over last night’s election results, where the Dems swept the nation and Deval Patrick made history as the state’s first African-American governor. In fact, I was probably one of the very few VCs who was at the Hynes Convention Center that evening (flying in from a very long day in NYC) to see all the speeches and celebrate the victory.
I just hope Deval governs from the middle, as promised in some of his recent interviews. I attended one of the business council meetings before the election and there was a whiff of populism that would make any VC, even very liberal ones, tremble. We can all agree that Clean Technology is a promising investment area, but should the state government be spending large subsidy dollars when VCs are pouring money into this field? And why is cleantech a better place for state subsidy dollars than nanotech, stem cell research, wireless, RFID and other promising technologies? Some in the audience argued that the "capital gap" between angels and VCs required government intervention. But most practioners know this is an absurd idea in an industry that has too much capital chasing too few ideas and a tremendous oversupply of local capital – in a relatively small economy, MA has the 2nd largest concentration of VCs and consistently attracts the 2nd largest amount of VC capital.
The government needs to be very careful not to try to pick winners and losers. VCs have a hard enough time figuring out what hot industry and hot companies are worthy of investment – would the MA state government be any better? I hope Governor Patrick truly focuses his formidable firepower and overwhelming popular mandate on addressing the key issues state government is uniquely capable of addressing, such as: (1) more affordable housing; (2) more affordable health care for consumers and businesses; (3) a strong public education system, K-12 as well as the state’s higher education infrastructure. If Governor Patrick moves the needle in these important areas, the local economy will really hum.