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December 30, 2004

Iowa Has Plans to Improve Bad Economic "Grades"

Posted by at 9:43 AM

The Hawkeye State is taking a hawkish stance on improving its bad "grades" on this year's economic report card by luring in Bay-Area venture funds.

Acuity Ventures, a San Jose-based venture firm which focuses on young, Web-based software companies, has agreed to invest $10 million on technology businesses expanding or relocating to Iowa over the next five years. Experts say this is the first such move in the state's history. The move promises to create 300 jobs with an annual salary of at least $50,000 each, nudging the farm-focused economy a high-tech step in the right direction, and it couldn�t have come at a better time.

The Corporation for Enterprise Development gave the Iowa economy its annual "grades," showing the venture agreement reached days earlier was much needed.

The Hawkeye state's report card, though with some bright spots, is more worthy of detention than the honor roll. According to the report, the state received a "D" in business vitality, citing that Iowa "needs to find ways to increase its entrepreneurial energy," ranking next to last in the number of new companies formed, with South Dakota bringing up the dubious rear. The report recommended that the state "stop chasing big business jobs that may not last" and focus more on the neglected entrepreneurial economy. The report also listed Iowa as 38th out of 50 in the total number of tech jobs available and 33rd in job growth due to new business.

But the news wasn't all bad. The state received a "B" for the overall performance of the economy but received a "C" in the capacity for development. The report deduced that "though providing quality jobs, an equitable income distribution and clean air, the state spawned few new companies and those that already existed invested little in their future capacity."

With above-average high school test scores, a foundation of top-tier universities and a loud commitment from the state to invest money in venture-minded firms, Iowa is on the right track to improve. With bold moves coming from companies like Acuity the Iowa small-business economy may be looking up, but it will remain grounded until it improves those low economic grades.