17 September 2011

What About Venture Capital for the Public Sector?

Scott Lewis hosted an Idea Tournament today.

It was, at the risk of sounding recursive, a pretty cool idea.

Quite simply, about 23 folks had 90 seconds each to present ideas as varied as closing streets once per quarter to create temporary parks or play areas, levying a congestion tax for cars as a means to simultaneously raise revenues for public transportation and lessen congestion, and allowing popular incumbents to be exempted from term limits. The winner proposed UCBC - The University of California Baja California - a university that would literally straddle the border between the US and Mexico. (How Scott Lewis is going to get the money for this proposal is still unclear. Especially to Scott.)

As interesting as this concept of an Idea Tournament is, it suggested to me something even more promising. I can see this evolving over the next 5 to 10 years into a forum for introducing something sadly lacking in government: the public sector equivalent of venture capital.

Venture capital finances ideas, stimulating innovation that traditional banks might never finance. The results of venture capital in the private sector are amazing, giving us an incredible array of technologies and companies, from computers to genetic engineering.

 If an entrepreneur has an idea for creating value in the private sector, no matter how disruptive it is, she has the potential to find funding from angel investors, venture capitalists and then, finally, the stock market. The invention of venture capital has helped to trigger countless technological inventions and new companies.

So what about the public sector? How are community needs addressed there? If an entrepreneur has an idea that won't create any profit but will create value - ideas that reduce homelessness, create safer parks, stimulate learning, reduce congestion, make areas more beautiful, or politicians more effective .... well, there simply isn't any financing for such a thing. There are foundations to fund the occasional proposal. The occasional visionary community might pass a bond. Even - an increasingly rare event in a time of austerity - state or local governments might fund some promising project. But for the most part, we simply have no equivalent to venture capital for the public sector.

All that to say that I could see Scott's Idea Tournament evolving into venture capital for the public sector within ten years. Imagine governments setting aside a portion of their budget to fund such ventures, social experiments and promising projects alike. Imagine innovation in government that could do as much to improve quality of life in communities as innovation in the private sector has done for quality of life in the home.

It's an idea worth considering.

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