Thursday, July 1, 2010

A Success Story - 20 Miles Away from the Massachusetts Mishap

Yesterday, I wrote about Massachusetts misguided attempt to recruit solar manufacturing jobs, and how $58 million in incentives and credits are about to end up in China.

But just 20 miles away from the Evergreen Solar plant in Devens, MA, the former industrial city of Lowell is transforming itself into an urban suburb of Boston. The city launched a Downtown Venture Fund, which in spite of the term "venture" is financing local retail, not tech start-ups.

The fund has offered low interest loan packages to 31 restaurants, bars, and coffee shops, of which three quarters have survived. Moreover, local ownership means the profits are being recirculated locally, not sent to a distant headquarters or scattered shareholders.

The program has become a victim of its own success to some extent, with some Lowellites (is that what you call them?) saying it needs to put more emphasis on retail, and less on places to eat. While Lowell's proximity to Boston means its success would be hard for many declining manufacturing centers to replicate. It nonetheless has important lessons for small business creation.

With few VC funds being invested outside a handful of regions, and most new manufacturing facilities requiring tremendous capital investment per new job created (anywhere from $600,000 to $1 million per job), an increasing number of communities will need to do more to create and grow their own small businesses, rather than give away tens of millions of credits and incentives for some "cool jobs" that will be gone in nine months.

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