To the editor:

I was surprised to learn that the members of the Lawrence/Douglas County Economic Development Board want local area governments to consider using taxpayer funds to invest in private business ventures that are unable to otherwise obtain funding. (J-W, Feb. 12). What venture capital expertise resides in local governments that would justify those governments making investment decisions for the hard-working taxpayers of Douglas County?

A board member is quoted: “It (risk capital) is the biggest hurdle to starting up a business in Lawrence.” In fact, risk capital is the biggest hurdle to starting up a business anywhere. There is good reason for that. It is difficult to obtain risk capital because for every good business plan there are thousands of not-so-good business plans. Individuals will be successful in the venture capital business only if they acquire the expertise necessary to identify the good risks. Have our local government officials acquired such expertise? Individuals who are investing their own money have very strong incentives to be very careful. Government officials investing other peoples’ money have different incentives.

“Board members said that when a venture capital fund is successful it can produce major new companies that will generate a significant number of high paying jobs.” There is no arguing with this tautology. But it is incumbent about board members to provide examples of successful government venture capital funds. Before we ask our local governments to assume this new and very difficult role, a little objective research is warranted.

Joe Sicilian,

Lawrence