House Speaker Roger Hanshaw is a pretty reserved guy, but if you want to see his eyes light up get him talking about the West Virginia Impact Fund.
House bill 4001 appeals to his wonkish approach to trying to improve the state’s economy. It has passed the House and will be taken up in the Senate, where it will also likely pass, but the challenge has been for the Speaker to explain it in a way that gets his fellow lawmakers as excited as he is.
The bill creates a state-owned sovereign fund that is designed to attract outside capital to West Virginia that can be used to finance major economic projects.
Our Brad McElhinny explained the fund this way:
“West Virginia could be the controlling partner, essentially the sponsor of the projects. In other words, West Virginia would be endorsing the investment with the state’s name.,” he wrote.
This is not a new idea. Some states and many countries already have such funds and they range in size. The Norway Government Pension Fund Global is the largest with assets of $1.1 trillion.
If the bill is approved, West Virginia’s sovereign fund would be one of the smallest, but you have to start somewhere. In fact, Hanshaw said on Talkline yesterday that he has already heard from two investors asking about the fund.
The bill also creates the Mountaineer Impact Office to manage the fund, searching for projects in the state to invest in that would generate a return for the investors. The state may put money in the fund, but the goal is to attract outside investors who are looking for places to invest their money.
Hanshaw says this fund will be driven by economic principles, not politics.
“Unlike efforts of the past, this bill is not about picking economic winners and losers, or using taxpayers dollars and special incentives to lure potential new businesses,” Hanshaw said.
“Instead, this bill leverages the power of the capital that’s already out there waiting for investment—and there are literally trillions of dollars around the world looking for potential investment—and creates a vehicle for our state to capture it and put it to work creating jobs in West Virginia.”
According to a 2018 story in U.S. News and World Report, four states—California, Massachusetts, New York and Texas—get 80 percent of all the venture capital dollars invested in this country. The report said that West Virginia was one of nine states that reported no venture capital activity.
Businesses need capital, especially as they are starting up, and one of the many economic challenges in West Virginia is the lack of venture capital and investment dollars. Another hurdle is the state does not have a vehicle for that investment money to come into the state.
The West Virginia Impact Fund would be that vehicle. The details of the legislation may be mundane, but when you think about the possibilities, it’s understandable why Hanshaw is excited.