Technology investment must go to everyday people
In August of this year, the Michigan Department of Labor and Economic Opportunities released its recommendations for investing the state’s US bailout money. One of the recommendations was to fund the âStartup Resiliency Initiativeâ which would inject $ 200 million into the state’s âearly stage tech ecosystemâ.
The proposal cites a sharp decrease in venture capital investment from 2019 to 2020 as the rationale for the investment. Of the $ 200 million, $ 140 million would go to direct capital investment, with more than half of that $ 140 million going directly to venture capital firms and angel investors. With this proposal likely to be considered by the state legislature in early 2022, I think it’s imperative that the Michiganders oppose public funding of private venture capital firms. Instead, we should demand opportunities for ordinary workers and business owners to invest in their own technological capacity.
The $ 200 million investment is based on the supposed loss of venture capital available for “new investments” over the past five years in Michigan, particularly from 2019 to 2020 due to COVID-19. Although these numbers, provided by the Michigan Venture Capital Association, paint a very different picture than other press releases covering the same period from the MVCA and the Michigan Economic Development Corporation.
Indeed, according to research by Crunchbase, no state has experienced such a dramatic increase in venture capital funding as Michigan in the past five years. Venture capital grew 886% from 2016 to 2020, according to Crunchbase, from around $ 200 million to $ 3.1 billion. The same research shows a slight drop from 2019 to 2020 (from $ 3.3 billion to $ 3.1 billion), but nothing in line with the MVCA’s claims. Additionally, this same Crunchbase data is used in press releases by both the MVCA and MEDC.
Why the gap? MVCA and MEDC say there is so much and so little venture capital to be done. We live in a time when venture capital is the richest and the most prosperous. According to National Association of Venture Capital, 2020 was a banner year for venture capital investments. Why should US bailout funds, which could greatly benefit the technological needs of small business owners and workers in other ways, be used to fund venture capital firms, the investments of which only benefit to a handful of tech startups?
I am a professor at Michigan State University and have been studying Michigan’s high-tech economics since 2017. What I see on the ground in the state’s poorest communities is no need for more. of tech startups, but rather a foundation for the need for technological capacity building in small and medium enterprises and digital literacy for everyday workers.
In the village of Benzonia, unpaid volunteers from the local library provide technical support to the elderly and students. On the Keweenaw Peninsula, small store owners struggle with the basics of online marketing in a digital environment controlled and driven by big tech companies. In Detroit, job seekers find it difficult to navigate predatory online job sites while looking for a living wage.
We don’t need to invest $ 140 million of public money in private tech startups, which have promised to revolutionize our everyday lives but above all have just revolutionized the portfolio of venture capitalists. Instead, we need to think about what technological development democratically looks like, beyond basic broadband infrastructure, to the people of the state of Michigan.
How many digital literacy courses could be funded for job seekers across Michigan with $ 140 million? What kinds of technological capacity building could $ 140 million provide in rural and urban communities for business owners who need equitable access to digital tools for their daily activities? What would it be like to take that $ 140 million and create a core of young people interested in advancing technology in Michigan’s low-income communities?
Michigan needs technological investment. But it has to go to everyday people, not to venture capitalists.
Jean Hardy is Assistant Professor of Media and Information and Director of the Rural Computing Research Consortium at Michigan State University.