I have written about research by the prestigious Kauffman Foundation that found the primary driver of employment growth in the U.S. economy is business startups (“Where do jobs come from? How do we spur growth?” Business Insider, May 18-24, 2011). The economic history of our Valley is filled with examples of local startups that created tremendous numbers of jobs: Albertsons, Simplot, Morrison-Knudsen, Micron, Extended Systems, ProClarity and Trus Joist, to name a few. Yet I see very little public policy that focuses on encouraging more startups.

Over the past nearly two years I have tried to reflect the impact private angel investors and entrepreneurs have on our economy through this column. I have written primarily from the perspective of my own experience as an angel investor, and as an officer and/or cofounder of the Boise Angel Alliance and its two angel funds, the Boise Angel Fund and the Treasure Valley Angel Fund.

The collective impact of the alliance and the funds has been substantial: $1.335 million cash have been invested by the funds in 11 Treasure Valley companies. Nine of the companies are technology-based. Two are based on consumer products. The companies have gone on to raise more than $20 million of additional capital.

Our year-end survey of employment was under way as this column was being written, but a preliminary estimate is that about 110 jobs have been created since we made our investments. If the jobs average $40,000 a year, that’s more than $4 million in annual wages being earned and spent in the Valley. Because the jobs are primarily professional and technical, they probably average more than $40,000.

I point that out because much of our public policy seems to be focused upon industry attraction or on traditional industries. Even the Boise Metro Chamber of Commerce’s economic development program is focused primarily on recruiting new businesses to the Valley. While business attraction is certainly one component of economic development, we seem to be doing very little in practical matters to encourage the formation of new businesses.

Accordingly, this column is a plea to our policy makers to give serious attention to the drivers of entrepreneurship. Other states have done so and reaped the benefits. The IGEM initiative is a start, albeit a very modest one. Here are two ideas that other states have implemented.

Create a fund of funds. Utah has done this. A fund of funds is a public investment of state dollars into a fund that invests in private investment funds, which in turn invest in companies. This approach leverages the state’s resources and puts capital to work in the private sector while leaving the decision-making to the private sector.

Here’s what Utah says on their website (utahfundoffunds.com):

• 52 Utah companies have raised more than $1.1 billion from the Utah Fund of Funds portfolio funds.

• The jobs created will produce more than $100 million in tax revenue over the next 10 years.

Angel Investment Tax Credit. According to the Angel Capital Association, about 20 states have adopted some type of angel investment tax credit. Such a provision benefits those who invest in early-stage companies within the state. This has the advantage of encouraging those in a position to invest in new companies to do so while allowing market forces to work. The state, in essence, provides some seed capital through tax credits without selecting winners and losers. The marketplace takes care of that.

Both of these devices have potential for increasing the number of startups in our state. While not all startups will succeed, our history shows that those that do prosper will make a significant positive impact on our economy through job creation and tax revenue.

Kevin Learned, special assignment with the Division of Research and Economic Development at Boise State. Past president of the Boise Angel Alliance and an investor in its funds, the Boise Angel Fund and the Treasure Valley Angel Fund. kevinlearned@boisestate.edu, kevinlearned.blogspot.com, 426-3573